Investors turn to international equity funds in April

But bonds raise more funds

May 12, 2017 @ 1:50 pm

By John Waggoner

Stock investors sent their money to Paris in April — and London, Hong Kong and Brussels, according to Morningstar's most recent report on mutual fund and ETF flows.

International equity funds saw a net $21.1 billion in new money in April, while U.S. equities saw just $1.6 billion. U.S. foreign large blend ETFs and funds, which look for growth at a reasonable price, were the category du jour, taking in $12.1 billion.

International managers should probably save the champagne for Bastille Day, however: Just $1.8 billion of net new money went to actively managed funds and ETFs. The rest went to passive strategies. Biggest foreign gainer: Vanguard Total International Stock (VGTSX), which raked in $2.3 billion.

As has been the case for some time, bonds edged out equities for new money, despite an eight-year bull market and a 13.6% rally since the Nov. 8 election. Taxable bond funds and ETFs had a net inflow of $26.1 billion last month, bringing the total 12-month inflow to $270.5 billion. Stock funds and ETFs, in contrast, have seen just $65.7 billion in net new money.

And — stop us if you've heard this before — Vanguard led the pack for April inflows, as $25.1 billion flowed to Valley Forge, Pa. iShares took second place, with $23.7 billion. JPMorgan came in last, with a $9 billion net outflow.

The past 12 months, Vanguard has seen net inflows of $326.8 billion, which is a bit more than the gross domestic product of South Africa. iShares had the second-largest inflow for the past 12 months, at $163.2 billion — a bit less than Qatar.

The difference between flows to actively managed funds and passively managed funds is gargantuan. Passively managed long-term funds and ETFs have seen $641.3 billion in net new money the past 12 months, which is roughly the size of Saudi Arabia's GDP. Passively managed sector funds add another $30.4 billion. Over the same time, actively managed funds have watched $264.6 billion flee.

Bragging rights for April goes to iShares Core S&P 500 (IVV), which saw $6.3 billion in net new money. SPDR S&P 500 (SPY) finished last for the money, as net $5.5 billion fled.

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