Money market funds are poised to be the big winner in fund flows for the year.
For the past 12 months through Nov. 30, they attracted $539.1 billion in net new flows, far more than the net $414.4 billion that flowed into taxable and municipal bond funds. Equity funds, in contrast, saw net outflows of $88.8 billion, according to Morningstar. (Asset allocation funds, which mix stocks and bonds, had net outflows of $49.3 billion).
“This remains by far the best year for money market inflows since the financial crisis,” according to the Morningstar report, which noted that their year-to-date inflows totaled $483.5 billion.
Investors appear squeamish about owning stock funds rather than money market and bond funds despite the equity rally that has sent the S&P 500 27% higher year to date, setting new record highs on an almost weekly basis recently.
Beyond the headline numbers for equity funds, however, are several developments that offset some of the bearishness. Most passive equity funds saw net inflows for the one-year period, totaling $255 billion, compared with $313.6 billion of outflows in actively managed stock funds. (Only passive sector equity funds experienced outflows, equal to a little more than $10 billion.)