According to Morningstar’s estimate of U.S. mutual fund asset flows for July, outflows from taxable-bond funds ebbed to $1.3 billion after record outflows of $43.7 billion in June, with investors continuing to favor bank-loan and nontraditional bond funds at the expense of more traditional intermediate-term bond categories.
Detroit’s bankruptcy filing kept municipal-bond funds in heavy redemptions, with the category group losing $10.3 billion in July to mark the fifth straight month of outflows.
Value offerings led the way among equity funds, which was likely a result of yield-starved fixed-income investors seeking dividend income, Morningstar said. Large-value funds collected $3.3 billion, the category’s strongest inflow since February 2007.
J.P. Morgan led all providers with inflows of $3.4 billion. Dimensional Fund Advisors, Oakmark, Principal Funds and MFS have also gained market share over the last year. Investors pulled $7.5 billion from PIMCO Total Return in July, its third month of outflows. The fund has seen outflows of $18.4 billion over the previous three months compared with inflows of $21.5 billion over the 16-month period from January 2012 through April 2013.
Morningstar estimates net flow by computing the change in assets not explained by the performance of the fund.