Risk-aversion reigned for investors in June, says Morningstar

Risk-aversion reigned for investors in June, says Morningstar in it's June report on U.S. mutual fund and ETF asset flows. The report shows long-term mutual fund flows turned negative in June for the first time since December 2010, losing $4.5 billion after May inflows of $22.6 billion. Investors pulled about $18.0 billion from U.S.-stock funds in June to mark the worst monthly outflow for the asset class since the peak of the credit crisis in October 2008.


Investors also lost their taste for credit risk, too, as they withdrew a net $6.3 billion from high-yield funds. U.S. ETFs saw inflows of $9.8 billion in June after outflows of $3.1 billion in May. Total U.S. ETF industry assets are up about 38 percent over the trailing 12 months.

Additional highlights from Morningstar's report on mutual fund flows:

• Investors redeemed about $41.4 billion from money market funds in June, the greatest monthly outflow for these funds since January.

• In June, the gap between active and passive flows reached its widest point—nearly $20 billion—since May 2009. Actively managed U.S.-stock funds accounted for all of June's outflows, while passively managed offerings saw inflows of nearly $1.1 billion.

• While international-stock funds, with outflows of $1.3 billion in June, did not suffer as much as their U.S. counterparts, several categories within the asset class took a beating. World-stock funds, for instance, have endured outflows in 23 of the past 24 months.

• Flows into taxable-bond funds dropped to $11.9 billion from about $20.8 billion in May, with most of these redemptions coming from high-yield offerings. Municipal-bond funds continue to turn the corner, registering inflows of nearly $1.0 billion in June.

Additional highlights from Morningstar's report on ETF flows:

• U.S.-stock ETFs had inflows of $3.3 billion in June to top all ETF asset classes. U.S.-stock ETFs experienced the second-largest ETF asset class-level outflow of $2.7 billion last month, second only to commodities ETFs.

• Investors added $2.4 billion to international-stock ETFs in June. Flows have changed direction almost monthly for this asset class, which saw outflows of $1.1 billion in May.

• Commodities ETFs realized the largest monthly outflow of any ETF asset class for the second consecutive month. With redemptions of $892 million, commodities ETFs were also the only ETF asset class with outflows in June.

• For the past four months, taxable-bond ETFs had contributed meaningfully to net U.S. ETF flows. The asset class saw inflows of $3.1 billion in June, its second-highest monthly inflow in the last 12 months.

To view the complete report, please visit http://www.global.morningstar.com/juneflows11.