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December 12, 2014 at 09:17 AM
The year isn’t quite over, but Morningstar says 2014 is likely to be an extremely stellar year for passive mutual funds.
“A clear pattern has emerged this year concerning the U.S. equity Morningstar Category Group: consistent outflows on the active side and inflows on the passive side,” said senior analyst Alina Tarlea in a report released Friday. “Looking back over a trailing one-year period, active U.S. equity funds lost $91.9 billion, and passive U.S. equity funds received $156.1 billion.”
The notable exception to this overall trend in November, Tarlea point out, is the active taxable-bond group. It had inflows of $5.6 billion last month – surpassing the $5.3 billion of outflows the group had over the 12-month period.
“Two months after Bill Gross’ departure from PIMCO, it appears that fixed-income fears are dying down and investors are gaining confidence in other taxable-bond options,” the analyst said.
Nonetheless, passive taxable-bond funds have seen inflows of $9.1 billion in November and $97 billion over the past 12 months.
“On a three-month moving average basis, active taxable-bond flows are still showing up as negative. Passive taxable-bond funds experienced inflows for the 12th-consecutive month,” the Morningstar analyst said.
Equity Momentum
In the equity category, passive funds are pummeling their active counterparts.
