As the third quarter drew to a close, investors continued to pour money into passive funds while active funds battled heavy outflows. Morningstar's fund flow data for September reveals that passive funds garnered over $39.8 billion in net flows. Passively managed US equity funds were the largest gainers in the category with inflows of $19.3 billion. Long-term active funds, on the other hand, witnessed outflows to the tune of $22.8 billion in September 2016.

Bonds funds were the biggest winners across both active and passive funds. Bond chasing continued as reasonable uncertainty persists over the Fed’s rate hike decision. Passive taxable bonds funds saw over $12 billion in inflows in September, while active funds saw $10.3 billion. Over $4 billion flowed into municipal bonds as well in both the active and passive categories combined.

Biggest Passive Fund Inflows:

Christmas came early for Vanguard. The company specializing in passive fund management secured four of the top five spots among passive funds with the highest inflows. (Vanguard overall saw $21 billion in passive fund inflows in September alone.) The only exeception was State Street’s Real Estate Sector SPDR.

Estimated  Net Flows (in Millions)

Passive Funds

Sept 2016

1 Year

Vanguard 500 Index

Vanguard Total Stock Market Index

Real Estate Select Sector SPDR

Vanguard Total Intl Stock Index

Vanguard Total International Bond Index 

5,014

3,872 

3,102

1,759

1,440

27,907

40,543

3,217

32,960

12,448

 

Biggest Active Fund Inflows:

While down on inflows, active funds weren’t completely out. Four of the top five funds in terms of inflows were fixed income funds. The sole equity fund on the list was a new fund, MM Select Equity Asset (MSEJX) which launched in September, 2016.

Fund

Net Flows

Sept 2016

Net Flows

1 Year

Prudential Total Return Bond

PIMCO Income 

Strategic Advisers Short Duration

MM Select Equity Asset 

Western Asset Core Bond  

1,580

1,293

996

947

897

6,396

12,964

1,023

947 

2,635

 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.