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US Fund Flows: February Fund Flows Show Rebound, Yet Reveal Investor Caution
Digital-assets funds broke their streak of monthly inflows with a $1.9 billion outflow in February.
Key Takeaways
Long-term US mutual funds and exchange-traded funds took in $78 billion in February 2025, bouncing back from a mediocre January.
Healthcare funds’ rough stretch of outflows continued in February.
Nontraditional-equity funds collected $8.2 billion, setting a monthly inflow record for the third straight month.
February Was a Mixed Bag for US Fund Flows
Long-term US open-end funds and ETFs had a better showing in February than in January, taking in $78 billion versus about $40 billion. But dollars largely flowed to taxable-bond and nontraditional-equity funds. Five of the 10 category groups suffered outflows, including two of the three traditional equity groups, suggesting investors remain somewhat cautious.
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
Healthcare Funds on Life Support
Healthcare funds can’t see to win. The sector has been among the worst-performing market segments since 2023, and recent scrutiny of the managed care industry hasn’t helped. Healthcare funds shed over $2 billion in both 2023 and 2024, suffering outflows in each month over that stretch. They saw over $4 billion of outflows in 2025 through February—easily the worst total among sector-equity categories.
Nontraditional-Equity Funds Play Pac-Man With Investor Dollars
The nontraditional-equity category group continues to outdo itself. It collected $8.2 billion in February, setting a monthly inflow record for the third consecutive month. The derivative-income category, home to covered-call funds, reeled in nearly $6.0 billion, and defined-income funds absorbed $1.2 billion. Both categories offer some degree of downside protection, a trait that has accelerated their adoption over the past three months.
Gold Strikes Back in February
After investors seemingly tossed gold to the curb in favor of Bitcoin, the shiny metal returned to favor in February at the expense of the digital asset. The commodities-focused category, which houses gold funds, took in $4.7 billion in February (its most since March 2022), and digital-assets funds shed $1.9 billion. Bitcoin prices plunged in February, while gold held strong.
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.
Unsure about the future of active management? Check out this insightful article from a Morningstar analyst.
This article is adapted from the Morningstar U.S. Fund Flows report for February 2025.Download the full report here.
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Note: The figures in this report were compiled on Feb. 28, 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 standard approach 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 fund's final assets 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.