Morningstar Reports Sharp Decline in US Mutual Fund and ETFs Flows for May

The leading independent investment research provider Morningstar Inc. (Morningstar) yesterday reported estimated US fund flows for May 2021, highlighting that long-term mutual funds and exchange-traded funds (ETFs) collected $83 billion, most of which flowed to passively managed funds.

Compared with their $156 billion haul in March and $124 billion intake in April, the total amount long-term mutual funds and exchange-traded funds collected in May were materially dropped. Investors continued to favor passively managed strategies, pouring $71 billion into index-tracking funds. Broken down by investment type, ETFs—most of which are passively managed—gathered $64 billion, while open-end mutual funds pulled in about $19 billion.

Furthermore, the firm pointed out that:

·Taxable-bond funds once again saw the greatest intake among U.S. category groups, gathering nearly $38 billion in May. Investors continued to pour money into categories offering greater protection against rising inflation and interest rates.

·After taking in a record $54 billion in March, U.S. equity fund flows were quiet for the second consecutive month with just $211 million of inflows in May.

·International-equity funds gathered $23 billion, extending their streak of inflows to seven months.

·Sector equity funds took in $6 billion, driven by inflows into passive funds that track cyclical equities such as financials and natural resources.