Morningstar Reports U.S. Mutual Fund and ETF Asset Flows for January 2017

CHICAGO, Feb. 17, 2017 /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 January 2017. The new administration's promises of tax cuts and infrastructure spending spurred confidence in U.S. equities in late 2016, but the majority of the flows redirected to fixed-income and international-equity funds in early 2017. In January, investors put $30.6 billion into U.S. equity passive funds as opposed to $50.8 billion in December 2016. On the active side, investors pulled $20.8 billion out of U.S. equity funds during the 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.

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

• Following investors' preferences for equities after the U.S. presidential election in November, investors are back to fixed income at the start of 2017, contributing $36.5 billion to taxable-bond and municipal-bond funds. January flows into U.S. equity were diminished, but remained positive with total flows of $9.9 billion. International-equity flows increased to $16.5 billion on the heels of encouraging economic data from Europe.
• Typically, traditional bonds do not perform well in an environment of rising interest rates, yet investors still chose taxable-bond funds in the month following the federal interest rate increase in December with total inflows of $32.2 billion.
• Morningstar Category trends for January show both large-blend and mid-cap blend in the top five, although their inflows all came from the passive side, mitigated by outflows on the active side. Among fixed-income categories, bank loan joins intermediate-term bond in the top five, with inflows of $4.1 billion on the active side. 
• Vanguard has dominated the asset management industry in terms of inflows for the past two years, as it attracted positive and increasing flows while the rest of the industry sank into outflow territory. In 2016, Vanguard alone attracted $1.1 billion of investor money daily.
• Among active funds, PIMCO Income, which has a Morningstar Analyst Rating™ of Silver, attracted the largest inflows of $1.6 million and Bronze-rated PIMCO Total Return suffered the largest outflows of $1.6 million in January. Despite sizable outflows from the allocation category group, Silver-rated American Funds American Balanced is second in the top-flowing five funds in January because of its consistent performance, garnering $915 million in the month. This fund was on the top-flowing list consistently in 2016.
• Among passive funds, SPDR S&P 500 ETF was the fund with the largest outflows in January of $3.3 billion, which is typical of the fund's flows pattern each year.

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

In addition, Jon Hale, Morningstar's head of sustainability research, recently examined funds that have added sustainable, responsible, or impact mandate (SRI) criteria to their strategies in a research report, "Sustainability-Focused Funds Garner Positive Flows in 2016," which is available here.

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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 nearly 540,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on approximately 18.5 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 $200 billion in assets under advisement and management as of Sept. 30, 2016. The company has operations in 27 countries.

Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar's Manager Research Group's current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not 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; references to securities in this press release should not be considered an offer or solicitation to buy or sell the securities.

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