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US equity passive fund inflows down USD1 billion in February

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Investors put USD29.1 billion into US equity passive funds in February, down from USD30.6 billion in January 2017.

On the active side, investors pulled USD8.9 billion out of US equity funds during the month, according to figures released by Morningstar.
 
Total inflows to US equity funds, both active and passive, doubled since January. 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 ETFs by computing the change in shares outstanding.
 
Investors continue to contribute to fixed income, adding USD35.5 billion in estimated net flows. The MSCI EAFE Index rose 1.4 per cent in February, signalling modest growth in developed international markets. International-equity funds enjoyed USD14.7 billion in new flows, with passive making up the majority at USD13.6 billion.
 
All category groups except allocation enjoyed positive flows in February, showing optimism about the US market. US equity has been in positive-flow territory for four consecutive months, a feat not witnessed since late 2014.
 
Morningstar xategory trends for February continue to show large- and mid-cap blend in the top five in terms of inflows. Intermediate-term bond was in the top spot, with inflows of USD6.2 billion to active and USD6.0 billion flowing into passive.
 
Among top US fund families, T Rowe Price, American Funds, and PIMCO had modest inflows on the active side in February, with USD1.7 billion, USD1.5 billion, and USD1.2 billion, respectively. Vanguard and iShares continued to dominate on the passive side, garnering USD29.8 billion and USD16.7 billion, respectively.
 
Among active funds, PIMCO Income, which has a Morningstar Analyst Rating of Silver, attracted the largest inflows of USD2.0 billion. Bronze-rated PIMCO Total Return continued to place in the bottom five despite good returns, with outflows of USD1.0 billion in February.
 
Active fund Vanguard Institutional Short-Term Bond had the worst outflows of all active funds in February, at USD1.6 billion. In the passive arena, iShares saw three of its funds land in the bottom five: iShares Russell 2000, iShares iBoxx USD High Yield Corporate Bond, and iShares MSCI Japan, with USD1.6 billion, USD397.0 million, and USD347.0 million in outflows, respectively.

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