Worldwide flows for mutual funds and exchange traded products (ETPs) in 2015 totalled USD949 billion, notably lower than the USD1.4 trillion that flowed into funds globally in 2014, according to Morningstar’s fourth annual Global Asset Flows Report.
The US fund industry had new asset flows of USD263 billion, down from USD580 billion in 2014. Asia showed the strongest organic growth rate, 18.6 percent, among the regions analyzed by Morningstar.
“2015 brought growing uncertainty for markets worldwide, fuelled by changes in monetary policies in the United States and Europe, slowing economic growth around the world, and slumping commodity prices, especially oil. Accordingly, inflows were lower in 2015 than 2014, and total assets decreased as global markets posted negative returns,” says Alina Lamy, senior markets analyst for Morningstar. “Whereas US-domiciled funds attracted the largest flows in 2014, we saw smaller and more evenly distributed flows across regions in 2015. Equity funds led category groups globally in terms of annual inflows, although 2015’s intake of USD305 billion was smaller than the USD476 billion these funds collected in 2014.”
In a notable change from trends observed in 2014, allocation funds gathered USD171 billion, outpacing inflows of USD132 billion for fixed-income funds, to become the global category group with the second-largest inflows.
Alternative funds enjoyed a second year of double-digit organic growth, the highest rate among global category groups, bolstered by investors seeking options to diversify and provide consistent returns in an environment of uncertainty for both equity and fixed income.
Vanguard maintained its position as undisputed leader of the fund industry, sustained and propelled by the growing popularity of index strategies. The majority of the firm’s USD251 billion inflow went to its passive funds, but its active funds also gathered inflows of USD15 billion. Among active fund providers, Fidelity and J.P. Morgan saw the highest 2015 inflows, collecting USD57 billion and USD23 billion, respectively.
For all major regions, the percentage of passive assets in equity funds was larger than the percentage of passive assets in fixed-income funds, and the United States had the highest percentage of passive assets of all regions. Nowhere was the divide between active and passive so pronounced as in the United States, where active funds suffered outflows in 2015 and passive funds attracted inflows of approximately USD400 billion.
Global ETP assets were near USD3 trillion at year end. While equity ETPs hold the vast majority of assets, fixed-income and alternative offerings have enjoyed healthy growth. The United States accounts for the largest volume of ETPs globally.