Morningstar’s estimated fund flows for December indicate that the final month of 2014 resembled prior months. Actively managed U.S. equity funds experienced outflows, though the level diminished from November, while passive-equity funds had inflows.
For the full year, active U.S. equity funds lost nearly $98.5 billion, and their passive counterparts received over $166.5 billion, according to a report compiled by Alina Lamy, a senior markets-research analyst for the Chicago-based group. (The figures include asset flows into both traditional mutual funds and ETFs.)
Actively managed taxable bonds were “heavily impacted by PIMCO-related events during the last few months of the year,” Lamy explained. In December, investors withdrew some $23.0 billion from the category.
For the full year, passive flows surpassed active ones for all equity category groups, the research firm says, as well as for taxable bonds. Still, investors favored active management in some other categories, like allocation, municipal bond and alternative funds.
Active-U.S. equity funds had outflows for the 10th-consecutive month, while passive-U.S. equity funds saw inflows for the 11th-consecutive month. “In fact, when stepping away from monthly numbers and looking at cumulative flows during the past three years, the pattern is becoming even more evident, with passive U.S. equity surpassing all other equity categories and active U.S. equity on the decline,” Lamy noted.
International-equity funds continued to receive inflows in December, though diversified emerging-market funds had some outflows. Overall, international equity funds have done well on both the active and passive side, she adds; however, passive funds experienced higher cumulative flows.
Active taxable bonds were still in negative territory in December, “after months of large PIMCO-driven outflows (except a small inflow in November),” the Morningstar analyst said. “These outflows may not be representative of the category in general, but they certainly go a long way to show how diminished investor confidence can have far-reaching repercussions.
Passive taxable-bond funds, on the other hand, had their 13th consecutive month of inflows.