Morningstar Reports U.S. Mutual Fund and ETF Asset Flows for November 2016

Chicago, IL - 16 December 2016

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 November 2016. In the wake of the U.S. presidential election, investors placed an estimated $41.9 billion into passive funds in November, lifting overall U.S. equity inflows to $20.7 billion, their highest tally in nearly two years. Assets continued to exit active U.S. equity funds for the 32(nd) consecutive month, with an estimated $21.2 billion in outflows in November, slightly down from October's $23.5 billion outflow. 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 November:

  • As investors expected that the Federal Reserve would soon raise interest rates, taxable-bond funds experienced $2.9 billion in outflows during November. Municipal bond funds also took a toll, with $10.5 billion in outflows. This is the highest net redemptions for municipal bond funds since August 2013.
  • Investors favored more narrowly focused equity offerings, with $19.0 billion going into passively managed sector index funds. Expecting a Trump administration to ease up on regulation of banks and brokerage firms, financial services passive strategies took in $9.1 billion.
  • For the first time in 2016, active intermediate-term bond funds saw monthly outflows, which totaled $4.0 billion in November. However, the category is in the black for the year with $46.8 billion of inflows. The top active category with the highest inflows in November was ultrashort bond, which brought in $2.8 million.
  • Vanguard Group remains the top passive provider with inflows of $23.7 billion on the passive side, but the firm saw outflows of $3.3 billion on the active side.
  • Among individual funds, the bulk of the month's inflows reflected broad market trends. The SPDR S&P 500 ETF topped passive funds for November with inflows of $7.5 million, followed by small-cap iShares Russell 2000 ETF with $6.2 million. With the big rally in financial services stocks, the Financial Select Sector SPDR Fund is third with inflows of $6.1 million in November.
  • Market trends dominated outflow activity, with emerging markets and gold ETFs taking a hit, reflecting downdrafts in both markets. In active fund outflows, Pimco Total Return and Templeton Global Bond Fund are both on the top-five redemptions list, continuing the recent trend of outflows for both strategies.

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.

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