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Mutual Fund, ETF Fund Flows Rebound in October: Morningstar

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What You Need to Know

  • Some $84 billion flowed into these funds and ETFs in October, up from $53 billion in September, the firm found.
  • Although investors favored technology and cyclically oriented sector funds earlier this year, they haven't consistently embraced either since June.
  • Strong demand for ESG funds continued in October: Funds with sustainability mandates had inflows of $4.9 billion.

Morningstar reported Thursday that $84 billion flowed into U.S. long-term mutual funds and ETFs in October, up from $53 billion in September, their lowest monthly intake of the year.

After hemorrhaging $7.5 billion in September, U.S. equity funds brought in $32 billion in October to lead all U.S. category groups. Passive large-blend funds powered the intake. 

October flows into international equity funds amounted to approximately $15 billion, well behind their U.S. counterparts, which this category group has outpaced for much of 2021. 

Sector-equity funds had inflows of some $6 billion in October, rebounding from a $700 million outflow in September. Morningstar noted that although investors favored technology and cyclically oriented sector funds earlier in the year, they have not consistently embraced either since June. 

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Taxable-bond funds experienced their lowest intake, $22 billion, since March 2020. Even so, their $486 billion of inflows so far in 2021 is the most of any category group. 

Strong demand for environmental, social and governance-related funds carried over into October. Funds that have sustainability mandates incorporated into their prospectuses, as measured by Morningstar, had inflows of $4.9 billion, bringing their trailing 12-month intake to $75 billion — a 36.6% organic growth rate. 

In October, $20.2 billion flowed into iShares, the most among all fund families. That sum narrowly exceeded the $19.7 billion that streamed into Vanguard, whose monthly flows had led all fund families for 10 consecutive months before October.

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