Global Fund Flows Had Worst Year Since 2011: Morningstar

Net flows into mutual funds and exchange-traded products worldwide totaled $606 billion in 2018, compared with a record $2 trillion in 2017, Morningstar reported this week. Global net flow last year were the weakest since 2011.

“Amidst an equity market correction and concern over credit markets, risk aversion was most evident among fixed income funds,” Kevin McDevitt, senior analyst at Morningstar, said in a statement.

“Overall, we saw investors become more strategic and less performance-driven when it came to equity funds, while they cut credit risk and sought shelter among short-duration vehicles, choosing to put $331 billion into money market funds.”

The data are based on assets reported by some 4,000 fund groups across 85 domiciles. In total, upward of 95,000 fund portfolios encompassing more than 240,000 share classes are represented.

According to the report, demand for index funds was strong globally. The U.S. led the major regions with $459 billion in index flows. Asia had some $117 billion in passive inflows, boosted by the Bank of Japan, which funneled $65 billion into ETFs. European investors directed about $80 billion to index funds.

Equity funds, which put up their worst calendar-year returns since 2008, collected $352 billion last year, well down from 2017’s $604 billion — but a lot better than inflows during the corrections in 2011 and 2016, when equity funds collected just $40 billion and $51 billion, according to Morningstar.