Morningstar: Fund Flows Target Alternatives and Europe

Morningstar has released its U.S. Asset Flows Update for September. Markets remained somewhat uneasy following the Federal Reserve’s decision to not raise interest rates in September. A weaker-than-previously-thought U.S.  economy and low U.S. inflation rate drove the Fed’s decision to delay an interest rate hike. While investors remained cautious in domestic markets, most September flows went into International equity funds, particularly in Europe where the European Central Bank’s quantitative easing has the region poised for growth.

Taxable bond funds continue to see net outflows, although not at the rate they have maintained in previous months. Total outflows for active and passive bonds combined were smaller than in recent months and passive taxable-bonds saw inflows of $5.9 billion.

Continuing last month’s trend, the alternative category saw the only positive flow on the active side in September, largely because alternative strategies are likely to perform better than traditional categories in poor market conditions.

For Morningstar’s complete report and deeper analysis of U.S. Asset flows, please click here.