30% market gains? Call me maybe

Investors shunned long-term equity investments in 2019 even as equities ran up 30% on the year. Year-end fund flow data from Morningstar show that U.S. equity funds, both mutual fund and exchange-traded funds lost a total $73 billion in net outflows, including more than $59 billion in July and August. Bond funds had positive net inflows in each month of the year, while non-U.S. equity funds had a modest $3.8 billion in net new money, helped significantly by net inflows of a $22.3 billion in the final two months.

Net flows to mutual funds and ETFs were telling of market sentiments, as investors preferred the more tactical and short-term nature of the latter. ETF flows ran away from mutual fund flows after May's volatility.

The battle of active vs. passive remained much the same, as passive funds added a cumulative $450.7 billion during 2019 while their active counterparts had $106 billion in net outflows for the year.