February 6, 2019

Morningstar's Annual Global Fund Flows Report Finds Markets Resilient Despite Decreased Demand for Funds in 2018

CHICAGO, Feb. 6, 2019 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today published its seventh annual Global Fund Flows Report examining worldwide 2018 mutual fund and exchange-traded product (ETP) fund flows. Overall, global net flows had their weakest inflows since 2011 with $606 billion in 2018, compared with $2 trillion in 2017. Money market funds had their best year since 2008 with inflows of $331 billion, and for the first time since 2007, Asia had the strongest regional long-term flows with $169 billion, buoyed by an intervention by the Bank of Japan.

"Amidst an equity market correction and concern over credit markets, risk aversion was most evident among fixed-income funds," said Kevin McDevitt, senior analyst and author of the Global Fund Flows Report. "Overall, we saw investors become more strategic and less performance-driven when it came to equity funds, while they cut credit risk and sought shelter among short-duration vehicles, choosing to put $331 billion into money-market funds."

Highlights from Morningstar's annual Global Fund Flows Report include:

  • While the U.S. led the major regions with $459 billion in index flows, demand was strong globally. Asia saw about $117 billion in passive inflows, with heavy influence from the Bank of Japan, while European investors directed about $80 billion to index funds.
  • Despite the worst calendar-year returns since 2008, equity funds collected $352 billion, a notable drop from 2017's $604 billion, although it was far better than inflows during the prior two corrections in 2011 and 2016, when equity funds collected $40 billion and $51 billion, respectively.
  • Fixed-income funds fared worse despite generally faring better during the correction, collecting $156 billion, a drop from 2017's $891 billion and the group's worst showing since 2013.
  • Passive index funds enjoyed strong inflows of $695 billion in 2018 at the expense of their active counterparts, who saw $87 billion of outflows.
  • Among fund families, Vanguard and BlackRock/iShares continued to dominate global fund flows in 2018 with $176 billion and $167 billion going to long-term funds, respectively.  Franklin Templeton lost about $44 billion to outflows in 2018, the most of any firm.

The Morningstar Global Fund Flows Report is based on assets reported by more than 4,000 fund groups across 85 domiciles. The report represents more than 95,000 fund portfolios encompassing more than 240,000 share classes and includes a global overview as well as analysis about the United States, Europe, Asia, and cross-border offerings. Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETPs by computing the change in shares outstanding.

For additional insights and data visuals, please download the report here.

The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $207 billion in assets under advisement and management as of Sept. 30, 2018. The company has operations in 27 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar's Manager Research Group's current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund's or a fund's or separately managed account's underlying securities' creditworthiness. This press release is for informational purposes only; references to securities or a separately managed account investment strategy in this press release should not be considered an offer or solicitation to buy or sell the securities or to invest in accordance with that strategy.

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