July was the third consecutive month of outflows from U.S. equity mutual funds, according to Morningstar.
The increased pace of outflows was likely a symptom of jittery markets. Morningstar estimates that $11.4 billion flowed from equity funds in July, up from $8.3 billion in June and $6.9 billion in May.
Overall fund flow was positive in July, at $14.4 billion. But that total is noticeably lower than previous months, according to the monthly report.
For the third month in a row, taxable-bond funds saw the greatest inflows among all category groups.
The high-yield bond category saw the largest outflows.
The outflow from U.S. equity funds belied overall equity trends. Vanguard Total Stock Market Index, Vanguard Institutional Index and Vanguard Total International Stock Index recorded inflows of $2.6 billion, $2.2 billion, and $1.8 billion, respectively.
Vanguard was the top performing fund-provider, with of the four of the five funds with the most inflows.
PIMCO’s Long Term U.S. Government Fund was the other of the top five-flowing funds for July.
But overall, investors continued to leave PIMCO funds, which experienced outflows in July for the 14th consecutive month, though July’s losses were the smallest during that period. PIMCO’s flagship Total Return fund saw $830 million flow out in July, and improvement over the $4.4 billion-average of outflows during the past 12 months, said Morningstar.
In spite of the overall outflow trend in U.S. equities, Vanguard’s largest index funds attracted strong inflows, suggesting investors’ attraction to low-fee, passively managed funds.
Fidelity’s performance lagged all other fund providers, due to outflows from two flagship U.S. equity funds, according to the report.
Flows into lower costing passively managed mutual funds dominated actively managed funds. More than $14 billion flowed into passive funds, while only $300 million flowed into active funds.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
