Skip to Content

February 13, 2024 | Last updated October 17, 2024

By Morningstar Manager Research

Blog

5 min read

US Fund Flows: Fixed-Income and Alternative Funds Continue to Prop Up Flows in September

Long-term US mutual funds and exchange-traded funds gathered $55 billion in September, roughly in line with their average intake so far through 2024.

Key Takeaways

  • Taxable-bond ETFs raked in $93 billion in the third quarter, driving a $124 billion.

  • Alternative funds collected nearly $11 billion in the third quarter, though the debut of spot ethereum ETFs failed to provide the same boost as bitcoin ETFs did earlier this year. 

  • A strong appetite for high-yield bond funds boosted both the taxable- and municipal-bond category groups. 

US funds collected $55 billion in September, which is around their average monthly take rate in 2024. Enthusiasm for equity funds remained weak, with minor inflows into US and international-equity funds and outflows from sector funds. Healthy inflows to the fixed-income and alternative category groups carried the month. 

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. 

This data was sourced from Morningstar Direct. Not a user? Get a free trial of Direct. 

A graph showing Monthly Long-Term US Fund Flows

Record Quarter for ETFs Bolsters Taxable-Bond Flows

Taxable-bond ETFs reeled in a record $93 billion in the third quarter, helping the overall cohort to $124 billion of inflows. Bond ETFs have been popular for some time, but the rise of active ETFs and stronger mutual fund flows have driven an excellent year for the broader taxable-bond cohort. It raked in $351 billion over the first three quarters of 2024, which translates into a 6.8% organic growth rate. 

A graph of Quarterly Taxable-Bond ETF Flows alongside Quarterly Taxable-Bond Mutual Fund Flows.

Investors Stick to Their Alternatives: Buffer Funds and Crypto

Alternatives hauled in $11 billion last quarter behind about $5 billion of flows into the digital assets and options-trading categories. That was a solid quarter for digital assets, but inflows of $1 billion into new spot ethereum ETFs were far less than what spot bitcoin ETFs got in the first quarter. Back then, the category expanded its share of the alternatives market from 18% to 30%. Its market share held steady at 27% this time around. 

A graph of Alternatives Market Share Flows in 2024

Municipal-Bond Investors Take on Riskier Offerings

The high-yield bond categories have fueled both the taxable- and municipal-bond cohorts in 2024. That trend accelerated in the third quarter. The high-yield taxable-bond Morningstar Category notched its strongest growth since early 2020, and high-yield funds earned one third of all municipal bond flows, punching above their 15% share of that market. 

A graph of High-Yield Bond and High-Yield Muni Quarterly organic growth rate

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:

  • S&P 500 Index Fund Dominance Continues 

  • Chinese Stock Rally Has Investors Seeing Red 

  • Metals Shine Amid Rising Tensions 

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 June 2024. Download the full report here.

Start a free trial of Morningstar Direct and evaluate fund flow data your way.

Download the Free Monthly Fund Flows Report

You might also be interested in...