Asset flows continue to accelerate out of active funds and into passive indexes, according to Chicago-based Morningstar.
U.S. investors put $10.8 billion into passive equity funds during the month, up from $9.3 billion in June, according to Morningstar’s U.S. Mutual Fund and ETF Asset Flows report for July 2017
On the active side, investors pulled $19.6 billion out of U.S. equity funds in July, compared with $14.6 billion in June.
Vanguard is still the leader in passive investing, with $20.1 billion of inflows to passive products in July, followed by BlackRock mutual funds and iShares ETFs, which together enjoyed $14.5 billion of inflows.
PIMCO attracted the most flows into active funds in July, with $2.5 billion of net active inflows, followed by Vanguard with $1.5 billion.
The Morningstar categories with the highest overall inflows in July were foreign large blend, intermediate-term bond, large-cap blend, and diversified emerging markets funds.
Altogether, taxable bond funds had inflows of $34.7 billion, while international equity funds had combined inflows of $23 billion.
Morningstar attributes the inflows into bond and international equity funds to declining expectations for U.S. GDP growth and improved outlook in Europe. The flows into emerging markets products accompany 25.5 percent growth in the MSCI Emerging Markets index year-to-date through July 31.
Alternative funds and commodities reversed the active-passive trend, as assets flowed out of passive funds and into active funds in July.
The passive fund with the highest inflows was the Vanguard Total Stock Market Index Fund (VTSMX), which saw $4.6 billion of inflows, followed by the iShares Core S&P 500 ETF (IVV), which saw $4.1 billion of inflows.