Taxable bond funds going strong - US Monthly Fund Highlights - October 2016

Net new flows to long-term mutual funds and ETPs totalled US$8.3 billion in October. Active and passive strategies continued to experience divergent trends in net investments. Passive funds led demand with US$34.4 billion of inflows (including US$15.7 billion to ETPs), while actively managed funds experienced aggregate net redemptions of US$26.2 billion in October.

Taxable Bond funds saw the strongest demand among long-term funds, attracting US$17.1 billion of net inflows. This segment has attracted US$185.6 billion of net flows in the year-to-date period, a substantial increase over the US$58.3 billion seen during the first ten months of 2015. Taxable Bond flows were nearly evenly split between passive (US$8.8 billion) and active (US$8.3 billion) strategies during October.

Active US and International/Global Equity funds saw outflows of US$35.9 billion in October, while index equity exposures attracted net inflows of US$25.4 billion. Net outflows among active funds were driven by redemptions in large capitalization strategies.

Net deposits into Money Market funds in October totalled US$6.0 billion. Taxable Money Market funds experienced inflows of US$6.0 billion, while Tax-Free Funds saw minor net withdrawals of US$400 million. Taxable Money Market funds have continued to experience a significant bifurcation driven by recently-enacted regulations, as government funds saw net deposits of US$103 billion while prime money market funds experienced net redemptions of US$96 billion.