HONG KONG, March 26, 2015—Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today published its third annual Global Flows Report examining worldwide 2014 mutual fund and exchange-traded product (ETP) asset flows. At the end of 2014, global open-end and ETP assets stood at nearly $30 trillion, up from $27 trillion in 2013. Net inflows totaled a record $1.3 trillion, compared with less than $1 trillion in 2013, and global equity funds accounted for approximately one-third of these inflows, $439 billion.

“U.S. equity markets posted respectable returns in 2014, but most other global markets did not fare as well. Economic headwinds in Europe diminished returns for equity investors in that region, while the appreciation of the U.S. dollar negatively affected U.S. investors in funds domiciled in other countries,” Alina Lamy, senior markets analyst for Morningstar, said. “If 2013 was the year when investors finally regained confidence in worldwide equity markets, 2014 seems to have been a year dominated by interest rates. As the search for yield becomes ever more challenging in the global fixed-income space, investors still appear to value the lower volatility of bonds. Despite extremely low yields, fixed-income funds collected $371 billion.”

Highlights from Morningstar’s Global Flows Report include:

·         The United States remained the largest investable market, holding 57 percent of the world’s assets, but the European and Asian markets are growing at a much faster rate than the mature U.S. market.

·         Investor preference for less expensive, passively managed index funds and ETPs, particularly among U.S. equity funds, is a clear trend in the United States, but one that does not seem to hold for cross-border, European, and Asian funds. In these regions, non-index funds received significantly higher inflows than their index counterparts in 2014. The passive investing trend is showing signs of catching on in Europe and Asia, however, even though the magnitude of overall flows is much smaller than in the United States.

·         Alternative funds had the highest 2014 organic growth rate, while allocation funds, which offer built-in diversification across asset classes, continued to attract steady inflows and also saw robust organic growth. Commodities funds, which a few years ago were the fastest-growing category group, had another difficult year because of falling oil prices.

·         Vanguard, the largest provider of mutual funds and the second-largest provider of ETPs globally, continued to thrive and led firm-level inflows in 2014, reaching almost $3 trillion in assets. It also grew its business on the active side, becoming the third-largest active fund manager in the world, with active assets of more than $900 billion at the end of 2014. PIMCO had outflows of $176 billion in 2014, a 26 percent decrease in global assets.  

The Morningstar Global Flows report is based on assets reported by more than 3,000 fund groups across 74 domiciles. In total, more than 89,000 fund portfolios encompassing more than 200,000 share classes are represented. Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETFs by computing the change in shares outstanding.

To view the complete report, please visit http://www.global.morningstar.com/globalflows2014.

For more information about Morningstar Asset Flows, please contact: MORNINGSTARDIRECTFEEDBACK@morningstar.com

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