Global equity markets in the first quarter extended their 2023 rally while bond returns stagnated as government bond yields rose. But one wouldn't know that by looking at the quarter's fund investment flows.

Net inflows into 澳洲幸运5开奖号码历史查询:exchange-traded funds (ETFs) and mutual 澳洲幸运5开奖号码历史查询:bond funds totaled $151.83 billion in the first quarter. That's almost three times more than the $53.68 billion net inflows—reflecting fund sales minus investors' redemptions—that went into equity funds.

The flows into bond funds occurred despite slight declines in government and 澳洲幸运5开奖号码历史查询:investment-grade bond returns during the quarter. Those returns reflected the quarter's 33-澳洲幸运5开奖号码历史查询:basis-point (bps) increase in the 10-year U.S. Treasury yield to 4.21%, and corresponding increases in European government bond yields, all of which helped drive yields higher on most fixed-income instruments.

The quarter's bond returns contrasted starkly with strong global equity returns. The S&P 500 Index gained 10.2% in the quarter, with the 澳洲幸运5开奖号码历史查询:MSCI All-Country World Index gaining 8.3%.

Active ETFs Gain Market Share

As they have for more than a decade, ETFs during the quarter continued dominating net inflows, compensating for continued outflows from traditional 澳洲幸运5开奖号码历史查询:actively managed mutual funds—particularly U.S. stock funds.

Quarterly net inflows into U.S. stock ETFs within 澳洲幸运5开奖号码历史查询:Morningstar's t⭕raditio🉐nal style and size paradigm totaled $94.6 billion, whereas investors withdrew a net $69.6 billion from similar U.S. actively managed mutual funds.

However, actively managed ETFs continued🐻 making inroads in the broader investment landscape. Though passively managed ETFs tracking pre-determined benchmarks attracted $118.86 billion in net inflows in the first quarter, active ETFs garnered $57.24 billion.

The latter category's quarterly net inflows equaled almost 10% of its $576 billion in assets, compared with about 1.8% for the $6.5 trillion passive ETF market and 1% for 澳洲幸运5开奖号码历史查询:smart-beta ETFs. Inꦡ other🀅 words, active ETFs drew about 30% of all ETF net inflows despite accounting for just 7% of the overall ETF market.

Emerging Markets Flows𒊎 Shine; Large Growth, Not So Much

The 澳洲幸运5开奖号码历史查询:MSCI Emerging Markets Index gained just 2.4% in the quarter, a fraction of the gains enjoyed by 澳洲幸运5开奖号码历史查询:developed market stocks. Nevert🤡heless, funds focused on EM stocks were one of the few equity categories among actively managed mutual funds that experienced net inflows.

Actively managed diversified emerging markets equity funds captured $4.8 billion in net inflows in the quarter, with funds managed by Fidelity attracting the majority of that amount.

Conversely, actively ꦗmanaged funds focused on large U.♕S. Growth stocks suffered $31.7 billion in net outflows during the quarter.

Large actively managed Growth funds such as 澳洲幸运5开奖号码历史查询:Peter Lynch's Fidelitဣy Magellan fund once were considered the darlings of the mutual fund industry. But the category's assets have fallen to $1.8 trillion during investors' 🔯ongoing steady march to cheaper ETFs.

Meanwhile, 澳洲幸运5开奖号码历史查询:money market funds attracted $18 billion net inflows during ꦰthe quarter as yield𒊎s remained attractive. But investors soured on them late in the quarter, withdrawing a net $92.1 billion in March.