Mutual fund and exchange-traded fund net inflows reached an estimated $1.97 trillion in 2017, compared to $835 billion in 2016, Morningstar said in its sixth annual Global Asset Flows report.
Worldwide net inflows flows were led by $798 billion in estimated U.S. net inflows (compared to $350 billion in 2016), followed by about $642 billion in cross-border net inflows ($165 billion in 2016), $247 billion in European net inflows ($126 billion) and $128 billion in Asian net inflows ($121 billion). The rest of the regions were: Latin America, with an estimated $81 billion in net inflows, up from $24 billion in 2017; Canada, at $46 billion, up from $34 billion; Oceania, $17 billion, up from $10 billion; Africa, $7 billion, down from $8 billion; Middle East, $7 billion, up from $2 billion in net outflows; and other Europe, at $1 billion, up from zero net flows.
"Favorable market conditions across the globe in 2017 attracted the greatest flows in more than a decade. Rallying equity markets, subdued volatility, and stable interest rates appear to have lifted investor confidence worldwide," said Kevin McDevitt, senior analyst at Morningstar, in a news release announcing the report results. "While all asset classes saw inflows, investors showed a preference for fixed-income funds in a stable rate environment."
Fixed-income funds saw $830 billion in estimated net inflows, compared to $410 billion in 2016, followed by equities at $582 billion compared to $17 billion in 2016. Estimated net inflows for asset allocation funds totaled $192 billion in 2017, up from $32 billion in 2016; money market net inflows totaled $177 billion in 2017, down from $227 billion in 2016; alternative funds, $84 billion, up from $59 billion; tax-preferred funds, $34 billion, the same as the previous year; miscellaneous funds, $32 billion, up from $28 billion; commodity funds, $12 billion, down from $29 billion; property funds, $7 billion, up from $5 billion; and convertibles, no net inflows, compared to $11 billion in net outflows in 2016.
Alternative funds led year-over-year organic growth at 13.6% in 2017, followed by fixed income at 12.6%, commodities at 7.8% and asset allocation funds at 6.1%.
Among fund families, BlackRock (BLK) led the way with $402 billion in estimated net inflows in 2017, compared to $156 billion in 2016, due primarily to its iShares ETFs, followed by Vanguard Group at $384 billion in estimated net inflows, compared to $318 billion in 2016. Fidelity Investments and J.P. Morgan Asset Management (JPM) ranked next with $37 billion and $36 billion in estimated net inflows, respectively.
The report also showed that the popularity of passive equity funds continues to increase, with 47.6% of equity funds in Asia in passive vehicles, 44.6% in the U.S., 33.3% in Europe and 11.1% in cross-border funds. In the U.S., passive equity net inflows totaled $470 billion, while actively managed equity funds saw net outflows of about $175 billion. In Europe, passive equity net inflows totaled $103 billion compared to $33 billion in net inflows for actively managed equity funds, and in Asia, passive equity funds saw $59 billion in net inflows vs. $14 billion in net inflows of active equity funds.