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US Fund Flows: US Investors Pump Billions into Active ETFs Amid Shaky Market Start in 2025
Long-term US mutual funds and exchange-traded funds collected $39 billion in January 2025, their weakest showing since August 2024.
Key Takeaways
Active ETFs hauled in $43 billion in January, a record that translated into their best organic growth rate since 2021.
Taxable-bond funds carried their 2024 momentum into the new year with $41 billion of inflows.
Ultrashort-bond funds paced all Morningstar categories with $12.6 billion of inflows, led by Janus Henderson AAA CLO ETF and a slew of other popular ETFs.
Flows Get Off to a Slow Start in 2025
Long-term US open-end funds and exchange-traded funds gathered just $39 billion in January, their weakest showing since August 2024. Appetite for equity funds was noticeably weak, save for sector funds. Investors seemed to hit pause amid a slew of news and uncertainty from the new presidential administration. Safe-haven asset classes, such as fixed income, and diversifiers, such as alternatives, fared better.
The charts below illustrate which direction the money is flowing for a variety of fund types. For a more complete analysis, download the full monthly report from Morningstar’s Adam Sabban and Ryan Jackson.
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How Morningstar Analysts Assess Fund Flows
Active ETFs Steal the Show in January
Investors piled a record $43 billion into actively managed ETFs in January. Records have become routine for active ETFs, whose monthly inflows marked new all-time highs six times in 2024. Still, January’s inflows stood out—they translated into a 5% organic growth rate, the best since February 2021.
Taxable-Bond Funds Pick Up Where They Left Off
Taxable-bond funds followed up their lucrative 2024 with a strong start to the new year. They hauled in $41 billion in January, well ahead of the next-closest category group. Municipal-bond funds followed suit, bouncing back with $6 billion of inflows after seeing modest outflows last December.
Ultrashort-Bond Flows Pace all Morningstar Categories in January
The ultrashort-bond category raked in $12.6 billion in January thanks to a band of red-hot ETFs. Janus Henderson AAA CLO ETF led the pack with a fresh $3 billion haul. A pair of PGIM products—one a fellow CLO strategy—combined for over $1 billion of inflows. These products function as cash alternatives with more attractive yield, meeting investors’ desire for safety while generating income and preserving some upside.
More on Fund Flows from Morningstar
For more comprehensive analysis and commentary on US Fund Flows, download this month’s full report.
Additional topics include:
Active/passive flows by US category group
Flows for the largest fund families
Government bond fund and money market flows
Can’t get enough fund flows data? Check out Morningstar’s Ultimate Guide to Fund Flows.
This article is adapted from the Morningstar U.S. Fund Flows report for January 2025.Download the full report here.
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Note: The figures in this report were compiled on Feb. 11, 2025, and reflect only the funds that had reported net assets by that date. The figures in both the commentary and the extended tables are survivorship-bias-free. This report includes both mutual funds and exchange-traded funds but not funds of funds unless specifically stated. It does not include collective investment trusts or separate accounts. Important methodology note: Morningstar computes flows using the approach that is standard in the industry: Net flow is the estimated change in assets not explained by the performance of the fund. Our method assumes that flows occur uniformly over the course of the month. Adjustments for mergers are performed automatically. When liquidated funds are included, the final assets of the fund are counted as outflows. Reinvested dividends are not counted as inflows. We use fund-level reinvestment rates to improve accuracy in this respect. We make ad hoc adjustments for unusual corporate actions such as reverse share splits, and we overwrite our estimates with actual flows if managers are willing to provide the data to us. When possible, Morningstar offsets outflows caused by transfers to other investment vehicles that share an identical mandate since they are not indicative of a change in investor interest.