Mutual funds make a comeback in February, Cerulli says

Data show the first net inflows into mutual funds in roughly two years, with an unprecedented $22 billion net influx into active ETFs.

February saw a notable inflection in the investment fund space as mutual funds witnessed net inflows for the first time since November 2021, according to the latest US Monthly Product Trends report from Cerulli Associates.

The resurgence in mutual funds, buoyed by the stock market’s robust performance, saw an infusion of $13 billion to vault total assets over the $19 trillion mark for the first time in nearly two years. This represents significant growth, with assets swelling by $634 billion, or 3.4 percent, during the month.

Cerulli’s latest research says despite net outflows of $20 billion, US equity mutual funds managed to see their assets increase by 5.3 percent during February. Taxable bond mutual funds also made headlines, with net inflows of $36 billion overcoming negative market movements to achieve a $2 billion asset increase.

The report also highlights a broader trend across both ETFs and mutual funds, with total fund assets climbing by $971 billion in February. Passively managed funds led the charge, outperforming actively managed funds by $84 billion over the same period.

While passive fund flows outpaced active funds for a fifth straight month in February, it was still a pivotal period for active fund strategies, which saw net inflows for the first time since October 2021. This resurgence was predominantly driven by an unprecedented $22 billion of net inflows into active ETFs, helping to tilt the balance of actively managed fund flows into positive territory year-to-date.

ETFs in particular saw a meteoric rise, with assets surging by $337 billion thanks in part to $46 billion in flows during February. US equity, international equity, and sector equity ETFs collectively attracted $45 billion of net flows.

However, alternative ETFs stole the show, growing assets by $34 billion on the strength of nearly $6 billion of net inflows. Digital asset funds, meanwhile, attracted $5.3 billion from investors.