CHICAGO, April 13, 2011 /PRNewswire/ — Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today reported estimated U.S. mutual fund and exchange-traded fund asset flows through March 2011. The pace of inflows into long-term mutual funds slowed slightly to $27.0 billion in March from approximately $27.9 billion in February, due largely to a reversal in U.S. stock flows. The asset class saw outflows of $934 million in March after taking in roughly $26.1 billion combined in January and February. Inflows for U.S. ETFs rose to $7.4 billion in March after reaching $6.6 billion in February despite outflows of $3.3 billion from U.S. stock ETFs, which typically drive industry inflows.
Diversified emerging-markets flows, which have attracted a significant amount of attention since the financial crisis began in late 2008, highlight a striking difference in the way American and European investors express their appetite for emerging-markets exposure. European investors have a much greater proportion of their money in emerging markets than American investors and more funds to choose from to gain emerging-markets exposure. But Americans have been adding aggressively to emerging-markets funds in recent years, and are increasingly choosing to invest in them through passively managed products. Six years ago, actively managed open-end mutual funds and ETFs comprised 79% of diversified emerging-markets assets, but today make up 53%.
Additional highlights from Morningstar’s report on mutual fund flows:
• Bank-loan funds, with inflows of $4.3 billion, drove the $18.0 billion that flowed into taxable-bond funds in March. Total category assets for bank-loan funds have reached $59.8 billion, surpassing the $41.2 billion peak reached in June 2007 by nearly 50%.
• Among U.S. stock funds, large-cap offerings lost about $3.2 billion across the value, blend, and growth categories, while small-cap funds enjoyed modest inflows of $791 million. However, investor preference for small-cap offerings hasn’t held with international-stock funds, where large-caps acquired $3.6 billion in new assets versus just $306 million for small-caps in March.
• Municipal-bond fund outflows slowed for a third consecutive month, with less than $2.6 billion in March redemptions. Still, roughly $40.4 billion has vacated muni-bond funds over the last five months, which represents 7.8% of beginning total assets.
• Demand for alternative and commodity funds remained steady with $1.1 and $1.8 billion in March inflows, respectively. Money market funds saw outflows of $12.5 billion in March after inflows of $16.7 billion in February.
Additional highlights from Morningstar’s report on ETF flows:
• Outflows from large-blend and large-growth ETFs accounted for most of the outflows from U.S. stock ETFs, as these categories lost $6.2 billion and $963 million, respectively. However, several categories in the asset class, including equity energy, natural resources, consumer discretionary, and consumer staples, saw inflows.
• After beginning the year with two consecutive months of outflows, international-stock ETFs saw inflows of $6.7 billion in March.
• Taxable-bond ETFs collected assets of $3.1 billion during the month, making a notable contribution to aggregate ETF inflows in March for the first time in seven months.
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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 Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 380,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 5 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services and has approximately $130 billion in assets under advisement and management as of Dec. 31, 2010. The company has operations in 26 countries.
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