Morningstar Reports U.S. Mutual Fund and ETF Asset Flows for October 2015; Publishes Research Examining Factors that Drive Investment Flows

Nov 13, 2015, 09:47 ET from Morningstar, Inc.

CHICAGO, Nov. 13, 2015 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported estimated U.S. mutual fund and exchange-traded fund (ETF) asset flows for October 2015. Morningstar analysts have also published a research paper analyzing long-term investors' mutual fund preferences as expressed in monthly asset flow data. The paper examines equity, fixed-income, and balanced funds globally to draw conclusions about how investors make investment decisions.

Highlights from Morningstar's report about U.S. asset flows in October:        

  • Despite stock-market gains worldwide, taxable-bond funds led all asset classes in October with inflows of $16.6 billion, the highest intake for the category group since March 2015. Passively managed funds drove these inflows; active taxable-bond funds saw a $1.5 billion outflow.
  • All category groups experienced active-fund outflows with the exception of municipal-bond and alternatives funds. International-equity funds continued to receive steady inflows, although smaller in magnitude than those seen earlier this year.
  • In a complete reversal from September, high-yield and intermediate-term bond were among the top five categories with the greatest inflows after landing on the list of categories with the greatest outflows a month ago. 
  • Each of the top-five actively managed funds in terms of October inflows were fixed-income funds: Fidelity Advisor® Total Bond, DoubleLine Total Return Bond, PIMCO Income, Northern High Yield Fixed Income, and Metropolitan West Total Return Bond.
  • Franklin Templeton slipped from the sixth to seventh spot on the list of largest asset managers after 11 consecutive months of outflows. BlackRock/iShares, with $15.0 billion, edged out Vanguard, with $14.7 billion, in terms of passive flows for the second straight month.

Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETFs by computing the change in shares outstanding. To view the complete report, please visit http://www.global.morningstar.com/octflows15.

Key findings from the "What Factors Drive Investment Flows?" report:

  • U.S. investors strongly prefer low-cost funds, but these preferences are virtually nonexistent outside of the United States.
  • Indexed equity funds receive higher flows at the expense of active equity funds. The trend reverses for fixed-income and balanced funds, as investors globally favor active strategies.
  • Investors expressed a strong preference globally for funds that invest in a socially conscious manner. Globally, equity funds that self-identify as socially responsible receive 0.40 percent greater flows per month than funds that do not.
  • Investors globally respond to Morningstar ratings—both the quantitative Morningstar Rating™ (the "star rating") and the qualitative Morningstar Analyst Rating. Funds with a higher Morningstar Rating attract greater inflows than funds with lower ratings. The five-tiered Analyst Rating scale has three positive levels, indicating Morningstar Medalists—Gold, Silver, and Bronze—and has proved to be a strong asset flow indicator as well.
  • Investors seek out funds from higher-quality firms, and a notable relationship exists between asset flows and portfolio manager tenure. Investors favor long-tenured managers and visible continuity of fund management, suggesting that funds with co-management and internal promotion practices are better insulated from the adverse effects of manager departure.

To read the full report, click here. For more information about Morningstar Asset Flows, please visit http://global.morningstar.com/assetflows

The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. References to and commentary about the above-mentioned funds should not be considered a solicitation to buy or sell that fund.

About Morningstar, Inc. Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 17 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $170 billion in assets under advisement and management as of Sept. 30, 2015. The company has operations in 27 countries.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar analysts' current expectations about future events and therefore involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees nor should they be viewed as an assessment of a fund's or the fund's underlying securities' creditworthiness. This press release is for informational purposes only; it should not be considered an offer or solicitation to buy or sell the mutual funds noted within. 

©2015 Morningstar, Inc. All Rights Reserved.

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Media Contact: Carling Spelhaug, +1 312 696-6150 or carling.spelhaug@morningstar.com

 

SOURCE Morningstar, Inc.



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