10.19.2020

U.S Open-End Funds On Track For Largest Annual Outflows

Morningstar, Inc., a leading provider of independent investment research, today reported estimated U.S. mutual fund and exchange-traded fund (ETF) flows for September 2020. Among long-term funds, open-end funds are on track for their worst calendar year ever after suffering $317 billion of outflows so far in 2020. ETFs, by contrast, have raked in $313 billion for the year to date. That is by far the widest asset-flows disparity between the two investment types since 1993, according to Morningstar data.

Morningstar’s report about U.S. fund flows for September 2020 is available here. Highlights from the report include:

  • In a month when the S&P 500 index reached a new all-time high on Sept. 2, 2020 before pulling back, long-term mutual funds and ETFs saw inflows of $13 billion in September, marking the sixth consecutive month of inflows. Separately, open-end mutual funds had $22 billion of outflows while ETFs collected $34 billion.
  • Money market funds, which had windfalls earlier in the year amid market tumult, also had outflows of $117 billion in September. Looking at the third quarter of 2020, these funds had a hefty $223 billion of outflows, the most since 2010’s first quarter but only a fraction of the $1.5 trillion they collected from April 2019 through June 2020.
  • Among category groups, taxable-bond funds continued to lead with another $39 billion of inflows in September following August’s $77 billion of inflows. They also netted a healthy $202 billion for the quarter—just shy of the record $203 billion they accumulated during the previous quarter. As in August, investors continued to seek middle-of-the-road risk exposure in September, putting nearly $15 billion into intermediate core and $10 billion into intermediate core-plus funds.
  • Investors continued to pull money out of U.S. equity funds in September. Although the $21 billion that left U.S. equity funds in September was the smallest amount since April’s $18 billion, the group suffered record quarterly outflows of $119 billion.
  • Allocation funds marked 64 consecutive months of outflows in September, with the world allocation category accounting for half of the month’s $8.3 billion in net redemptions.
  • Vanguard retained the top spot among fund families with approximately $11.7 billion of inflows, with inflows on both the active and passive fronts during the month. The firm benefited from investors’ interest in taxable-bond funds; Vanguard’s offerings in that category collected more than $13 billion. Dimensional Fund Advisors’ $4 billion of outflows in September was the most among fund families. The firm has had at least $2.6 billion of outflows every month since March 2020.

To view the complete report, please click here.

Source: Morningstar

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