High-yield and corporate bond fund flows surge in May

Active bond funds saw increased interest in May has investors poured a net $23.2 billion into institutional share classes. The move was an about-face after the asset class saw $75.4 billion in outflows, driven at least in part by the Federal Reserve's plan to support the corporate bond market through ETF purchases.

High-yield and corporate bond funds made up the top five funds by net flows in May, notably the PIMCO High Yield Fund ($1.78 billion) and BlackRock High Yield Fund ($1.75 billion). J.P. Morgan's High Yield and Corporate Bond funds added a net $1.65 billion and $1.26 billion during the month, respectively.

Institutional U.S. equity and ex-U.S. equity mutual funds continued to see outflows despite a relatively good month for their respective indexes. Year-to-date outflows were $21.6 billion and $8.7 billion for U.S. and ex-U.S. equity funds, respectively.

The influx into active bond funds helped pull active funds out of their 2020 tailspin, while passive fund net flows were negative for the third straight month. Much of those net outflows were related to Vanguard's U.S. broad market-tracking Total Stock Market Index Fund, which lost a net $1.98 billion in May.