Investors Add $15.9B to Long-Term Mutual Funds

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.

The completed report on July asset flows can be found here. More information about Morningstar asset flows can be found here.