Morningstar Fund Flows for July Shows Investors Shunning U.S. Stocks

Investors continue to shun U.S. stocks and are increasingly putting their money into funds that feature bonds, commodities, and alternative investments, according to the latest research from Morningstar.

In its U.S. mutual fund and exchange-traded fund (ETF) asset flows report for July, released Wednesday, August 11, Morningstar said that nearly $12.4 billion exited U.S. equity funds last month, despite a strong rebound in share prices. While the average domestic large-blend fund is still down 6.8% overall during the past three months, the category gained 6.8% in July.

ETFs, meanwhile, registered total net inflows of $6.8 billion in July, marking the sixth consecutive month of positive asset flows. Total ETF assets are up 6% since the start of the year and 29% over the trailing 12 months.

Overall, flows into U.S. open-end mutual funds increased slightly in July to $14.1 billion versus $13.5 billion in June.

“But this small change understated the acceleration in this year’s underlying themes, “commented Editorial Director Kevin McDevitt in the August issue of Morningstar Direct Fund Flows Update. “Almost universally, outflows picked up in equity and balanced funds; and inflows rose for bond, alternative, and commodity funds.”