Strong stock market performance and the first positive month of net inflows since 2021 made February a strong month for mutual funds, Cerulli Associates said. But secular trends, including increased use of separately managed accounts and ETFs, mean this performance is more likely an anomaly than a sign of a shift in the market’s use of mutual funds.
Mutual funds had net inflows of $13 billion this month, with the growth coming from bond funds, Cerrulli said. U.S. stock mutual funds saw net outflows of $20 billion this month, while taxable bond mutual funds saw net inflows of $36 billion.
Other sectors that saw net inflows included municipal bonds, commodities and international stock mutual funds, while alternative investments, industry stocks and allocation mutual funds saw net outflows.
Among sponsors, Fidelity topped the list with $24 billion in capital inflows. U.S. funds had the largest outflows, with $5 billion exiting their funds during the month.
“Over the past 10 years, we’ve started to see growth and a preference for more diverse options in consumer investment strategies, whether it’s more ETFs, more SMAs,” said Brendan Powers, director of product development. Or more CIT use.” , with Cerulli. “The theme hasn’t really changed. In terms of retail SMAs, it’s about cost, tax efficiency and personalization. So as investors use these other vehicles, we’ve seen net negative flows in mutual funds for quite some time .”
The factor driving the temporary reversal in February was demand for bond strategies.
“Bonds have seen positive net inflows over the past few months. Increased bond inflows and lower equity outflows are likely the reason we’re achieving this,” Powers said.
Outflows this month were nearly $20 billion, compared with $29 billion in January and $37.5 billion in December.
