Investors’ Demand for Index Funds Persists

Net new investment to long-term mutual funds and exchange-traded funds (ETFs) totaled $16.1 billion in February, according to Strategic Insight, an Asset International company.

Demand for index funds persisted, as passive stock and bond funds netted $19.9 billion. Net outflows from active funds totaled $3.9 billion during the month.

Equity funds attracted $1.2 billion in February, with $4.7 billion of net inflows to International/Global products. Active International Equity mutual funds netted $6 billion during the month, led by diversified ex-U.S. equity funds.

Large-capitalization U.S. stock strategies continued to drive aggregate net outflows from active U.S. Equity funds. Among passive Equity products, high-inflow strategies during the month included diversified US Equity Growth & Income funds ($5.9 billion) and Gold ETFs ($5.2 billion).

Monthly net investment to Bond funds totaled $14.9 billion. Taxable Bond funds netted $9.5 billion, driven by $12.8 billion of net inflows to index funds. Top-inflow objectives in February included Corporate Intermediate Maturity ($6.5 billion), Corporate High Yield ($4.8 billion), and Corporate Bond General ($4.6 billion). Tax-Free products continued to steadily attract new investment totaling $5.4 billion.

Money Market mutual fund net deposits totaled $38.8 billion in February.