June 18, 2019 / 4:00 PM / 3 months ago

Active U.S. equity funds lose $12.9 billion to outflows in May: Morningstar

People sit outside the New York Stock Exchange (NYSE) in New York, U.S., May 30, 2019. REUTERS/Brendan McDermid

(Reuters) - Passive U.S. equity funds recorded $2.7 billion in outflows while active U.S. equity funds lost $12.9 billion to outflows in May, Morningstar reported on Tuesday, underscoring a long-term shift away from active equity managers.

Money market funds collected $82 billion in May, the group’s second best month in 10 years, Morningstar said.

Vanguard led all families with $16.7 billion of inflows for the month of May, followed by $5.1 billion from Fidelity, with iShares’ flows flat, Morningstar said. At the other end of the spectrum, State Street Global Advisors was hit hard by $22.6 billion in outflows, followed by Invesco’s $5.8 billion in outflows, Morningstar said.

“Vanguard continues to dominate the fund flows battle as they offer a wide array of passive mutual funds and ETFs (exchange-traded funds) that have gained traction with investors,” said Todd Rosenbluth, head of ETF and mutual fund research at investment research firm CFRA.

For their part, taxable bond inflows fell dramatically in May from $42.6 billion in April to $15.4 billion in May, the group’s worst showing year to date.

Credit-oriented high-yield bond and bank-loan funds fared worse, losing $5.8 billion and $3.1 billion, respectively, to outflows, Morningstar said.

“It is concerning that active taxable bond funds have lost some of their luster as investors historically were willing to pay up for active bond funds even as they shifted to passive for equity strategies,” Rosenbluth said.

Reporting by Jennifer Ablan; Editing by Chizu Nomiyama and Jeffrey Benkoe

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