Flows into U.S. mutual funds and ETFs reached a record $684.6 billion in 2017 due to massive inflows into passive funds, according to Morningstar's annual fund flow report, which covers mutual funds and ETFs.
A total $692 billion flowed into passive funds, led by U.S. equity and international equity funds, while almost $7 billion flowed out of actively managed funds, which was far less than outflows in the previous two years. Still, by year-end the total assets of actively managed funds stood at $11.4 trillion compared with $6.7 trillion for passive funds.
Vanguard accounted for almost half ($328 billion) the inflows into passive funds last year followed by BlackRock, with $213 billion in inflows. Pimco led among actively managed funds, with $33 billion in inflows — almost all of it into the PIMCO Income Fund (PIMIX) — followed by Dimensional Fund Advisors ($31 billion), which distributes its retail funds only through financial advisors. (It also sells to institutional clients.)
The biggest fund family losers were Fidelity Investments, which saw outflows of $40 billion in its actively managed funds — though inflows of $51.3 billion in passive funds — and Franklin Templeton Investments, which saw outflows of $28 billion from its actively managed funds but only $398 million of inflows to passive funds.
Among fund categories, the biggest winners were passive U.S. equity, international equity and taxable bond funds — each having more than $200 billion in inflows. "Indexing is no longer limited to U.S. equity and expanding into other asset classes," according to the Morningstar report.
