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Pace of US equity fund outflows increased in July

Investors withdrew money from US equity funds for the third consecutive month, with the pace of outflows increasing to USD11.4 billion in July from USD8.3 billion in June and USD6.9 billion in May, according to Morningstar.

Overall, flows into long-term mutual funds remained positive in July at USD14.4 billion, but this total is noticeably lower than in recent months.
 
Taxable-bond funds continued to see strong inflows despite declining interest rates. For the past three months, taxable-bond funds have seen the greatest inflows among all category groups.
 
Despite the strong month for the taxable-bond category group overall, high-yield bond funds saw outflows of USD7.9 billion in July after much milder redemptions of USD466 million in June and inflows of more than USD1.2 billion in each of the previous months of this year except January. Bank-loan funds also saw sizeable outflows of USD1.9 billion.
 
Even though US equity funds saw outflows, Vanguard Total Stock Market Index, Vanguard Institutional Index, and Vanguard Total International Stock Index recorded July inflows of USD2.6 billion, USD2.2 billion, and USD1.8 billion, respectively. With four of the five top-flowing funds for the month, Vanguard topped all providers in terms of July inflows, while Fidelity suffered the greatest provider-level outflows as a result of large redemptions from two of its flagship active US equity funds.
 
Passive funds continued to dominate, collecting USD14.1 billion in July compared with inflows of USD0.3 billion for active funds.

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