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BlackRock Ousts Vanguard as Top Firm for Fund Inflows

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BlackRock, the world’s largest asset manager, is now the No. 1 recipient of global fund inflows, replacing Vanguard.

According to Morningstar’s 2019 global fund flows report, BlackRock and iShares, its ETF unit, attracted $298 billion in net asset flows in 2019, topping Vanguard’s $263 billion. The organic growth rate of BlackRock’s flows was 11%, almost double the 5.6% rate of Vanguard. Vanguard’s Total Stock Market Index, which is the largest U.S. fund by assets, had an organic growth rate of just 2.8%, its lowest in the past decade. (Morningstar defines organic growth rate as the estimated net flow over a period divided by beginning net assets.)

Fidelity ranked third in net new asset flows, at $193 billion. More than 60% of those flows came in the second half of the year after the firm launched two zero-fee index funds.

Invesco and T. Rowe Price both saw net outflows similar to the levels experienced in 2018 — $38 and $11 billion, respectively, in 2019, and Pimco experienced net inflows of $72 billion versus outflows of $7 billion the previous year.

A spokesman for T. Rowe Price told ThinkAdvisor in an email that “reported net outflows from our mutual funds do not take into account client transfers of assets to other investment products such as collective investment trusts and separate accounts.” The firm reported $13.2 billion in net client inflows for 2019.

“Given the evolving dynamics of investment product distribution, and the increased use of other vehicles, reporting only on mutual fund flows presents an inaccurate view of client activity and overall flows, and misrepresents our business,” he said in the email.

Total global fund flows reached nearly $1.6 trillion in 2019, almost double the flows the year before with nearly 38% directed into money market flows, the biggest haul since 2008. Fixed income funds attracted almost all the remaining 63% of flows. Equity flows were almost flat despite the soaring stock market.

Passive funds continued to lead in inflows. Of the $1 trillion in net long-term global flows, $769 billion went into passive funds and $252 billion into active funds, primarily fixed income. Active fixed income funds had inflows of $625 billion while active equity funds had outflows of $357 billion. Overall equity fund flows, including active and passive, were basically flat.

Morningstar describes 2019 as “one of the roughest years for active equity funds, trailing only 2017 and 2018” when outflows were close to $400 billion.

“Shops focused on active strategies continued to struggle in 2019,” according to Morningstar, which highlighted Invesco. “The firm completed its acquisition of OppenheimerFunds in May, and net outflows from many former Oppenheimer funds weighed on Invesco,” the report said.

Actively managed fund assets, however, continued to top those of passive fund assets despite smaller inflows, though their overall asset share among equity funds fell, from 58.6% to 56.5%. The U.S. and Asia had the lowest share of active funds’ assets compared to other world regions — 65% each, versus about 80% or more in other regions.

U.S. funds led in overall inflows, totaling $399 billion, followed by European funds with $254 billion.

The Morningstar fund flows report is based on assets reported by more than 4,000 fund groups across 85 countries. It covers 95,000 fund portfolios and 240,000 share classes.

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