? Morningstar Direct SM U.S. Asset Flows Update Morningstar Manager Research 16 May 2016 Data through April 30, 2016 U.S. Mutual Funds and Exchange- Traded Products Alina Lamy Senior Analyst Markets Research +1 312-384-3924 alina.lamy@morningstar.com Taxable- and Municipal-Bond Funds Attract the Highest Inflows in April Investors continued to gravitate toward fixed income for the third consecutive month in April. Taxable- and municipal-bond funds were the highest-receiving Morningstar category groups, with estimated net inflows of $22.8 billion and $5.9 billion, respectively. Taxable bonds received balanced inflows on both the active and passive side; municipal bonds received a majority of the inflows on the active side (not surprising, since there aren t many passive municipal-bond fund options out there). All the equity category groups (and allocation) sustained outflows in April on the heels of weak U.S. corporate earnings and a disappointing employment report, which fueled concerns that the U.S. economy might be losing momentum. Active equity funds once again bore the brunt of these outflows; all flows into passive equity funds were positive, although not large enough to drag the overall flows into positive territory. International-equity funds posted their first outflow since October 2014. Even though this may be just another off month (like October 2014), international-equity flows, although positive, have been significantly decreasing and are now nowhere near the levels witnessed in the first half of 2015. Active Passive Estimated Net Flows* April Assets April Assets 1 Year 1 Year $Mil 2016 $Bil 2016 $Bil U.S. Equity (20,300) (179,452) 3,478 10,416 127,408 2,515 Sector Equity (1,623) (13,313) 385 989 9,563 359 International Equity (3,994) (699) 1,471 2,481 115,600 851 Allocation (2,499) (51,880) 1,133 282 673 56 Taxable Bond 11,691 (86,447) 2,227 11,074 104,755 829 Municipal Bond 5,631 26,410 622 233 4,750 24 Alternative (118) 8,875 175 737 8,466 48 Commodities 438 (539) 24 237 7,242 65 All Long Term (10,775) (297,045) 9,515 26,450 378,458 4,747 Money Market (41,223) 163,874 2,722 *Includes liquidated and merged funds.
Page 2 of 12 Total (Active and Passive) Estimated Net Flows April Assets 1 Year $Mil 2016 $Bil U.S. Equity (9,885) (52,044) 5,993 Sector Equity (634) (3,750) 744 International Equity (1,513) 114,901 2,322 Allocation (2,217) (51,207) 1,190 Taxable Bond 22,765 18,308 3,056 Municipal Bond 5,864 31,160 646 Alternative 619 17,341 223 Commodities 676 6,703 89 All Long Term 15,675 81,413 14,263 Money Market (41,223) 163,874 2,722 Recent economic and market news has been mixed. The U.S. stock market has recovered somewhat after its January and February losses, but not enough, it seems, to drive investors back to equities. The Federal Reserve increased rates once last year, but further raises are beginning to look less and less certain. The trend toward international-equity diversification has also slowed down compared with last year. In times of uncertainty, investors are turning to the asset class that offers moderate risk and at least some return (and also a fairly certain income stream): fixed income. Exhibit 1. Category Group Flows During the Past 12 Months ($ Billion) 60 40 U.S. Equity Sector Equity International Equity Allocation Taxable Bond Municipal Bond Alternative Commodities 20 0-20 -40-60 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2015 2016
Page 3 of 12 However, monthly flows can be highly volatile, and sometimes even a seemingly established trend can be misleading over short periods of time. To put things in perspective, Exhibit 2 displays rolling 12-month flows into U.S. and international equity and taxable and municipal bonds since 2000. Taxable-bond inflows were clearly at their peak after the financial crisis (as fear persisted long after the actual returns started to recover). Investors only started going back to U.S. stocks in 2012. U.S. equity flows started declining again in 2014, and international-equity flows also had a big drop recently. However, what s most interesting is that taxable-bond flows, which have been increasing during the past few months, are not anywhere near their pre- or post-crisis levels, but actually close to zero on a rolling 12-month basis. Risk management and yield chasing? Most likely. Flight to safety? Not even close. Exhibit 2. Rolling 12-Month Flows ($ Billion) 400 300 200 U.S. Equity International Equity Taxable Bond Municipal Bond 100 0-100 -200 2000 2002 2004 2006 2008 2010 2012 2014 2016
Page 4 of 12 Cost Can Predict Fund Performance In a recently released study, my colleague Russel Kinnel, director of manager research and editor of Morningstar s FundInvestor, examined the importance of cost to a fund s ability to deliver superior performance. The findings revealed that expense ratios are proven predictors of future fund performance. Funds with lower expenses have higher success ratios, which indicate the percentage of funds that survived and outperformed their category group average, while higher-cost funds have lower success ratios. The study found that the least expensive funds were at least 2 to 3 times more likely to succeed than the priciest funds, and this finding held across virtually every asset class and time period examined, which clearly indicates that investors should keep cost in mind no matter what type of fund they are considering. Exhibit 3. Subsequent Total-Return Success Ratio by Expense Ratio Quintile 80 60 40 20 Expense Ratio Quintile Begin Year 1 2 3 4 5 65 62 59 54 54 56 51 48 50 50 50 52 45 45 44 39 39 34 30 31 31 32 29 28 24 20 19 21 17 16 0 U.S. Equity Sector Equity International Equity Balanced Taxable Bond Municipal Bond and Investors Are Paying Attention If a lower expense ratio means a higher probability of success (and a higher return), and investors are becoming aware of this fact, why would an investor still choose a more expensive fund? The answer is, (s)he wouldn t, at least in equity and fixed income, as Exhibit 4 illustrates. In the equity and fixed-income categories, a fund needs to be in the least expensive 20% of funds to receive positive flows on a consistent basis. In the alternative category, fees are not the main driver of flows, as strategies are more diverse and performance can vary widely. Allocation funds had outflows across the board, irrespective of fee level.
Page 5 of 12 Again, this doesn t mean immediately running to the least-expensive funds and disregarding all the rest. What it does mean is that investors should pay close attention to cost and include the expense ratio as an important factor in fund selection. Exhibit 4. Trailing 12-Month Flows Into Open-End Funds ($ Billion) 100 80 Allocation Alternative Equity Fixed Income 60 40 20 0-20 -40-60 -80 Low Below Average Average Above Average High Intermediate-Term Bond and Large Blend Are the Top-Flowing Categories Intermediate-term bond was the Morningstar Category with the highest flows once again in April. Intermediate bonds are a reasonable middle-of-the-road choice for most investors, because short-term bonds don t yield enough and long-term ones have higher interest-rate risk. The same reasoning applies to municipal bonds (the municipal-national intermediate category had the fourth-largest flows), plus the tax benefits, of course.
Page 6 of 12 Top- and Bottom-Flowing Morningstar Categories Active Passive Estimated Net Flows* April Assets April Assets 1 Year 1 Year $Mil 2016 $Bil 2016 $Bil Leading Intermediate-Term Bond 7,052 14,924 771 8,440 39,758 395 Large Blend (3,893) (50,005) 673 8,307 76,261 1,603 Foreign Large Blend 292 14,009 355 3,387 106,619 452 Muni-National Intermediate 2,769 17,916 170 275 2,587 9 Short-Term Bond 2,774 (3,444) 261 150 8,572 82 Lagging Large Growth (9,715) (36,727) 1,148 (2,953) 6,382 165 World Allocation (2,351) (25,866) 309 1 (72) 0 Nontraditional Bond (2,077) (23,301) 111 (17) (72) 0 Mid-Cap Growth (2,134) (13,834) 245 63 493 23 Small Growth (1,579) (9,591) 155 (267) (1,025) 26 *Excludes money market. Surprisingly, though, for all the outflows from U.S. equity, large blend appeared second on the top-flowing category list. Vanguard Total Stock Market Index VITSX and ishares MSCI USA Minimum Volatility USMV pulled this category up to second place, with inflows of $2.8 billion and $1.2 billion, respectively. The ishares MSCI USA Minimum Volatility exchange-traded fund seeks to track the investment results of an index composed of U.S. equities that, in the aggregate, have lower volatility characteristics relative to the broader U.S. equity market. Even though it hasn t made the top five in this report, this ETF has been enjoying higher flows in the past four months, indicating that investors are still interested in U.S. equity s potential returns but unwilling to shoulder the increased risk and volatility the U.S. market has been experiencing recently. USMV returned 5.2% this year through the end of April, a much more attractive prospect than SPDR S&P 500 s SPY 1.7% return during the same time period. Also, in line with our earlier cost discussion, both ETFs have reasonable expense ratios of 0.15% and 0.09%, respectively.
Page 7 of 12 Exhibit 5. ishares MSCI USA Minimum Volatility Flows ($ Billion) 2.0 ishares MSCI USA Minimum Volatility 1.5 1.0 0.5 0.0 (0.5) Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 On the other hand, it seems investors are shying away from growth, as evidenced by the three growth categories appearing on the bottom-flowing list. There was no sign of high-yield bond anywhere near the top five this month after a significant $10.7 billion inflow in March. Nontraditional bond hasn t budged from the bottom five. American Funds Overtakes Fidelity to Become Second-Largest After Vanguard Consistent inflows for American Funds and outflows for Fidelity prompted a reversal in the top 10 this month, with American Funds climbing to the second spot and Fidelity dropping to the third. American Funds and Vanguard were the only firms with sizable inflows on the active side in April. Vanguard, ishares, DFA, and Fidelity enjoyed inflows on the passive side.
Page 8 of 12 Top 10 U.S. Fund Families Active Passive Estimated Net Flows April Assets April Assets 1 Year 1 Year $Mil 2016 $Bil 2016 $Bil Vanguard 3,382 15,177 812 17,941 202,760 2,235 American Funds 1,503 5,209 1,202 Fidelity Investments (3,706) (28,448) 975 1,834 16,670 211 BlackRock/iShares (967) (5,569) 212 4,577 93,982 873 T. Rowe Price 77 (1,443) 450 67 (260) 28 SPDR State Street Global Advisors 24 2,027 4 (546) 23,444 432 Franklin Templeton Investments (2,803) (41,307) 389 PIMCO (873) (50,403) 297 (80) (590) 4 Dimensional Fund Advisors 2,034 23,171 282 J.P. Morgan 601 5,088 264 75 (236) 6 Although recent inflows are still nowhere near its precrisis glory days, American Funds has made a skillful comeback, all the more impressive because it s happening at a time when most active funds (especially equity ones) are in a world of pain. Exhibit 6. American Funds Monthly Flows ($ Billion) 12 8 American Funds 4 0 (4) (8) (12) (16) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Page 9 of 12 American Funds has been so successful recently because it delivers on a promise that, as we ve seen, really matters: cost. Eighty-two percent of its funds are in the low or belowaverage fee level, meaning least expensive (in the bottom two quintiles in terms of cost). And in terms of performance, American Funds American Balanced ABALX, which appears on the top-flowing list this month, beat out 97% of its peers in the allocation 50%-70% equity Morningstar Category in the past year. Although American Funds has mostly been known for its equity lineup, its bond funds have taken center stage (and the highest inflows) recently. The firm s Bond Fund of America ABNDX and Intermediate Bond Fund of America AIBAX took in $334 million and $213 million, respectively, in April, indicating that American Funds is joining the battle for investors fixedincome money. Top-Flowing Active and Passive Funds Assets Assets Estimated Net Flows April 2016 1 Year April 2016 April 2015 $Mil $Mil $Mil Active Funds Metropolitan West Total Return Bond 1,736 8,843 75,633 65,775 PIMCO Income 1,256 11,998 57,856 44,877 DoubleLine Total Return Bond 1,046 11,360 58,781 46,171 American Funds American Balanced 963 5,492 90,439 82,579 JPMorgan Short Duration Bond 825 535 11,709 11,132 Passive Funds Vanguard Total Bond Market Index 2,838 13,595 161,336 144,738 Vanguard Total Stock Market Index 2,752 18,119 423,362 406,550 Vanguard Total Bond Market II Index 2,056 3,016 98,819 93,489 Vanguard Total International Stock Index 1,695 60,614 204,692 162,548 Vanguard Total International Bond Index 1,325 16,476 57,580 39,657 Top-Flowing Funds: Welcome Back, MetWest Total Return Bond After a month that saw a Vanguard fund lead the active top-flowing list (oh, the irony), Metropolitan West Total Return Bond MWTRX claimed the top spot after a notable absence. Regulars PIMCO Income PIMIX and DoubleLine Total Return Bond DBLTX were joined by JPMorgan Short Duration Bond OGLVX, adding up to four fixed-income funds and an allocation fund in the top five in April.
Page 10 of 12 If its active fixed-income fund didn t make it to the top five this month, Vanguard more than made up for it by grabbing the top five spots on the passive list. The five index funds are a welldiversified mix, covering U.S. equity, international equity, and fixed-income. Exhibit 7. Flows for Select Fixed-Income Funds During the Past 6 Months ($ Billion) 3 2 DoubleLine Total Return Bond Fund PIMCO Total Return Fund Vanguard Intermediate-Term Invmt-Grd PIMCO Income Fund Templeton Global Bond Fund Metropolitan West Total Return Bond 1 0 (1) (2) (3) Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16
Page 11 of 12 Bottom-Flowing Active and Passive Funds Assets Assets Estimated Net Flows April 2016 1 Year April 2016 April 2015 $Mil $Mil $Mil Active Funds PIMCO Total Return (1,140) (23,455) 87,125 110,398 Ivy Asset Strategy (1,075) (11,940) 9,340 24,758 American Funds Growth Fund of America (834) (5,821) 140,523 147,715 Templeton Global Bond (834) (14,154) 49,973 68,283 T. Rowe Price Real Assets (734) (124) 4,509 4,725 Passive Funds PowerShares QQQ (3,212) (3,581) 36,251 39,499 ishares MSCI Japan (1,291) (290) 16,564 18,577 ishares 1-3 Year Treasury Bond (1,122) 1,619 10,311 8,672 ishares 20+ Year Treasury Bond (858) 2,356 8,905 6,309 Consumer Staples Select Sector SPDR (856) 927 9,352 7,717 Ivy Asset Strategy IVAEX posted its third month of outflows following a manager change announcement on Feb. 2. Michael Avery, who has managed the fund since 1997, will retire on June 30. My colleague Leo Acheson, who covers the fund, writes that Avery s departure comes as a surprise and represents a meaningful loss for the firm. He served as the longesttenured manager on this fund and has been widely viewed as the heir apparent to CEO Hank Herrmann. As successful as American Funds was this month with its balanced fund, it didn t fare as well with its Growth Fund of America AGTHX, which was severely hit as investors pulled money out of all domestic growth categories. T. Rowe Price Real Assets PRAFX was a newcomer to the bottom-flowing list in April. The five bottom-flowing passive funds were an interesting mix, with ishares suffering outflows from three of its ETFs (short- and long-term Treasury bonds and Japan equity). PowerShares QQQ is a very technology-heavy ETF, and its performance dropped again in April after a March recovery, dragged down by weaker-than-expected earnings from large tech companies.
Page 12 of 12 Note: The figures in this report were compiled on May 12, 2016, 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 so. Important methodology note: Morningstar computes flows using the approach that is standard in the industry: Estimated net flow is the 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. Please click here for a full explanation of our methodology.? 22 West Washington Street Chicago, IL 60602 USA Morningstar 2016. All Rights Reserved. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869.
Morningstar Direct SM Publishing Date: 2016-05-13 Page 1 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % 1-Mo YTD 1 Large Blend 4,416 4,416 18,153 26,259 2,276 15.96 2,263 15.40 0.86 3.02 2 Large Growth (12,669) (12,669) (27,874) (30,345) 1,313 9.20 1,382 9.41 (1.18) (4.93) 3 Intermediate-Term Bond 15,492 15,492 40,211 54,682 1,166 8.18 1,088 7.40 1.23 6.62 4 Large Value 1,453 1,453 1,687 (15,841) 1,004 7.04 1,041 7.09 2.34 7.87 5 Foreign Large Blend 3,679 3,679 28,991 120,628 807 5.66 777 5.29 3.71 0.52 6 Allocation--50% to 70% Equity 262 262 (441) (3,272) 467 3.28 471 3.21 3.28 5.98 7 World Stock (1,420) (1,420) (4,307) (6,200) 385 2.70 416 2.83 2.95 5.55 8 Diversified Emerging Mkts 1,278 1,278 4,443 (5,459) 353 2.48 427 2.91 2.46 12.54 9 Short-Term Bond 2,924 2,924 5,236 5,128 343 2.41 326 2.22 0.80 2.95 10 Foreign Large Growth (1,569) (1,569) 1,455 7,821 331 2.32 357 2.43 1.86 (1.16) 11 Mid-Cap Blend (556) (556) (4,868) 2,195 326 2.29 341 2.32 1.99 4.56 12 World Allocation (2,350) (2,350) (11,265) (25,939) 309 2.16 352 2.40 3.99 8.81 13 High Yield Bond 2,314 2,314 13,840 (8,111) 290 2.03 313 2.13 5.62 10.36 14 Small Blend 1,133 1,133 (1,326) (941) 272 1.91 288 1.96 2.85 4.54 15 Mid-Cap Growth (2,071) (2,071) (8,783) (13,341) 268 1.88 299 2.04 1.15 (2.02) 16 Mid-Cap Value (35) (35) (505) (8,815) 228 1.60 249 1.70 2.22 10.36 17 World Bond 197 197 (3,360) (5,064) 212 1.49 220 1.49 2.43 11.64 18 Allocation--30% to 50% Equity 39 39 (1,861) (10,416) 197 1.38 215 1.47 3.17 8.06 19 Multisector Bond 1,401 1,401 756 (8,024) 182 1.28 194 1.32 3.31 7.15 20 Small Growth (1,845) (1,845) (5,579) (10,616) 180 1.26 207 1.41 2.22 (5.09) 21 Muni National Interm 3,043 3,043 10,571 20,503 179 1.26 153 1.04 1.31 4.30 22 Health (824) (824) (10,660) (5,775) 154 1.08 179 1.22 6.81 (21.22) 23 Foreign Large Value 615 615 2,597 1,177 145 1.02 163 1.11 5.60 4.60 24 Real Estate 519 519 1,403 (2,263) 142 0.99 139 0.94 (3.62) 6.43 25 Corporate Bond 2,724 2,724 10,999 13,972 131 0.92 117 0.80 2.80 9.85 26 Small Value 292 292 1,444 (538) 124 0.87 131 0.89 3.92 10.69 27 Muni National Short (457) (457) 659 (962) 121 0.85 120 0.82 0.44 1.44 28 Allocation--70% to 85% Equity 25 25 (243) (1,820) 118 0.83 122 0.83 2.98 4.63 29 Inflation-Protected Bond 1,761 1,761 2,241 896 116 0.81 107 0.73 0.65 8.01 30 Nontraditional Bond (2,094) (2,094) (11,797) (23,373) 111 0.78 138 0.94 2.93 2.73 31 Intermediate Government (44) (44) 4,244 5,681 111 0.78 105 0.71 0.07 4.59 32 Bank Loan (459) (459) (6,256) (21,284) 95 0.67 120 0.81 3.43 6.80 33 Muni National Long 1,003 1,003 2,360 2,210 89 0.63 84 0.57 2.00 6.12 34 High Yield Muni 1,018 1,018 4,454 6,034 86 0.60 77 0.52 1.76 5.82 35 Ultrashort Bond (1,029) (1,029) (1,468) (388) 85 0.60 84 0.57 0.42 0.88 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß
Morningstar Direct SM Publishing Date: 2016-05-13 Page 2 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % 1-Mo YTD 36 Technology (249) (249) (4,793) 580 78 0.55 82 0.56 (4.10) (7.73) 37 Europe Stock (1,829) (1,829) (7,530) 6,611 75 0.52 80 0.54 3.62 (1.90) 38 Short Government (1,136) (1,136) 407 4,025 58 0.41 54 0.37 0.04 1.68 39 Multialternative (119) (119) 2,075 14,498 57 0.40 47 0.32 0.91 1.06 40 Global Real Estate (80) (80) (1,298) (1,149) 56 0.39 58 0.40 1.53 10.13 41 Emerging Markets Bond 1,127 1,127 173 (5,474) 56 0.39 62 0.42 4.23 13.90 42 Commodities Precious Metals 516 516 9,012 4,840 50 0.35 43 0.29 13.21 44.12 43 Equity Energy 871 871 3,371 4,041 50 0.35 55 0.38 22.06 26.93 44 Energy Limited Partnership 239 239 2,039 3,287 39 0.27 51 0.35 26.22 15.77 45 Financial (248) (248) (5,074) 2,401 39 0.27 39 0.27 6.76 (3.57) 46 Preferred Stock 1,112 1,112 3,084 6,356 38 0.26 32 0.22 2.98 4.25 47 Muni California Long 315 315 1,065 1,392 38 0.26 35 0.24 1.81 5.63 48 Foreign Small/Mid Growth (79) (79) 189 2,544 37 0.26 36 0.24 1.57 (2.41) 49 Utilities 96 96 4,660 1,427 36 0.25 34 0.23 (1.21) 22.36 50 Natural Resources 159 159 71 (2,535) 36 0.25 44 0.30 17.65 32.10 51 Japan Stock (1,806) (1,806) (5,534) (112) 35 0.25 42 0.29 1.69 (10.02) 52 Long-Short Equity (389) (389) (2,042) (6,718) 35 0.25 45 0.30 (0.48) (0.96) 53 Miscellaneous Region (213) (213) 24 (2,193) 34 0.24 42 0.28 54 Long Government (1,316) (1,316) 5,467 6,777 33 0.23 25 0.17 (0.98) 13.90 55 Commodities Broad Basket 575 575 2,588 (583) 31 0.22 39 0.26 16.78 17.41 56 Foreign Small/Mid Blend (82) (82) 289 3,344 30 0.21 28 0.19 3.66 2.68 57 Tactical Allocation 24 24 (1,200) (2,136) 30 0.21 34 0.23 0.23 1.89 58 Managed Futures 470 470 5,267 10,818 29 0.20 20 0.13 0.13 0.38 59 Consumer Cyclical (1,211) (1,211) (3,833) (1,853) 26 0.18 28 0.19 (2.44) 0.16 60 Foreign Small/Mid Value (40) (40) 214 1,575 25 0.18 25 0.17 4.35 4.76 61 Equity Precious Metals 152 152 355 210 24 0.17 19 0.13 58.87 165.00 62 Muni California Intermediate 396 396 1,415 2,850 24 0.17 20 0.14 1.32 4.39 63 Market Neutral 222 222 312 (2,864) 24 0.17 27 0.19 (1.13) 0.79 64 Consumer Defensive (615) (615) 1,552 2,598 23 0.16 19 0.13 0.04 8.86 65 Muni Single State Long 148 148 494 177 22 0.16 21 0.14 0.59 2.06 66 Long-Term Bond 128 128 (734) (1,889) 22 0.15 23 0.16 2.13 14.64 67 Pacific/Asia ex-japan Stk (94) (94) (704) (8,962) 21 0.15 36 0.24 (0.25) 2.99 68 Muni New York Long 78 78 173 (697) 19 0.13 19 0.13 1.69 5.20 69 Allocation--85%+ Equity (161) (161) (726) (1,977) 19 0.13 22 0.15 2.68 2.37 70 Trading--Leveraged Equity (861) (861) (2,901) (502) 17 0.12 20 0.13 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß
Morningstar Direct SM Publishing Date: 2016-05-13 Page 3 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % 1-Mo YTD 71 Industrials 489 489 400 (2,662) 17 0.12 20 0.13 3.00 9.79 72 Convertibles (187) (187) (1,523) (3,250) 16 0.11 21 0.14 1.97 (1.09) 73 China Region (388) (388) (1,945) (4,488) 16 0.11 28 0.19 (1.38) (12.82) 74 Infrastructure (154) (154) (745) (2,608) 14 0.10 18 0.12 5.73 19.71 75 Muni Single State Interm 91 91 345 253 14 0.10 13 0.09 0.54 1.96 76 Diversified Pacific/Asia 15 15 (594) (969) 13 0.09 15 0.11 1.96 0.88 77 Trading--Inverse Equity 1,037 1,037 4,608 5,143 12 0.08 8 0.06 78 Option Writing 54 54 106 164 11 0.08 11 0.08 0.60 (0.63) 79 Long-Short Credit (321) (321) (1,389) (3,089) 11 0.08 15 0.10 1.03 0.42 80 Muni New York Intermediate 104 104 351 662 11 0.08 10 0.07 1.44 4.30 81 Muni Single State Short (61) (61) (646) (1,448) 10 0.07 12 0.08 0.29 1.14 82 Allocation--15% to 30% Equity 52 52 (141) (445) 10 0.07 11 0.07 0.90 2.48 83 Muni Pennsylvania 41 41 115 (60) 9 0.07 9 0.06 0.66 2.11 84 India Equity 47 47 (97) (838) 9 0.06 10 0.07 4.09 (5.84) 85 Emerging-Markets Local-Currency Bond (337) (337) (1,282) (5,084) 9 0.06 15 0.10 3.88 19.11 86 Communications 200 200 819 814 8 0.06 7 0.05 0.20 11.33 87 Multicurrency (328) (328) (830) (4,009) 7 0.05 12 0.08 1.20 4.18 88 Muni Massachusetts 37 37 179 168 7 0.05 7 0.05 0.62 2.04 89 Muni New Jersey 26 26 41 (284) 7 0.05 7 0.05 0.74 2.40 90 Latin America Stock 378 378 757 480 6 0.04 6 0.04 14.52 51.88 91 Commodities Energy (515) (515) 407 2,532 6 0.04 6 0.04 14.36 2.30 92 Muni Ohio 33 33 129 111 5 0.04 5 0.03 0.66 2.31 93 Volatility 959 959 2,038 2,448 5 0.04 3 0.02 94 Muni Minnesota 49 49 158 260 5 0.03 4 0.03 0.59 1.90 95 Target-Date 2030 8 8 (50) (386) 4 0.03 5 0.03 0.97 4.19 96 Target-Date 2020 2 2 (148) (701) 4 0.03 5 0.03 1.45 3.79 97 Trading--Inverse Debt 276 276 (256) (623) 4 0.03 5 0.04 98 Bear Market (32) (32) 249 (567) 3 0.02 4 0.03 (1.82) (5.69) 99 Target-Date 2040 5 5 (35) (311) 3 0.02 4 0.03 1.69 4.23 100 Target-Date 2025 21 21 42 (81) 3 0.02 3 0.02 (1.25) 5.75 101 Trading--Leveraged Commodities (503) (503) 56 3,268 3 0.02 3 0.02 102 Miscellaneous Sector 22 22 (73) (250) 3 0.02 4 0.03 103 Target-Date 2035 14 14 65 45 2 0.02 2 0.01 (1.51) 5.26 104 Target-Date 2050 16 16 30 (2) 2 0.01 2 0.01 (1.71) 5.08 105 Commodities Agriculture 87 87 71 1 1 0.01 2 0.01 4.57 3.86 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß
Morningstar Direct SM Publishing Date: 2016-05-13 Page 4 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Morningstar Categories Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Total Net Assets ($bil) Total Return 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % 1-Mo YTD 106 Target-Date Retirement 5 5 (61) (172) 1 0.01 2 0.01 1.10 3.32 107 Target-Date 2045 14 14 49 38 1 0.01 1 0.01 (1.75) 4.93 108 Single Currency (213) (213) (258) (186) 1 0.01 1 0.01 109 Trading--Inverse Commodities 351 351 495 (150) 1 0.01 1 0.01 110 Trading--Miscellaneous 7 7 (134) (448) 1 0.01 1 0.01 111 Target-Date 2015 (13) (13) (59) (288) 1 0.00 1 0.01 (0.85) 6.13 112 Target-Date 2000-2010 (5) (5) (31) (198) 0 0.00 1 0.00 2.28 4.09 113 Trading--Leveraged Debt (105) (105) (61) (143) 0 0.00 1 0.00 114 Target-Date 2055 11 11 57 103 0 0.00 0 0.00 2.93 12.64 115 Commodities Industrial Metals 13 13 (7) (42) 0 0.00 0 0.00 116 Target-Date 2060+ 0 0 2 3 0 0.00 1.06 1.18 117 Commodities Miscellaneous 0 0 (1) 0 0 0.00 0 0.00 21.42 (28.23) Top 10 13,846 13,846 67,554 153,400 8,447 59.22 8,548 58.19 All 15,565 15,565 64,284 81,815 14,263 100.00 14,690 100.00 Top Fund Families Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Assets Under Management ($bil) 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % 1 Vanguard 21,323 21,323 92,863 217,937 3,047 21.37 2,858 19.45 2 American Funds 1,503 1,503 6,267 5,209 1,202 8.43 1,223 8.33 3 Fidelity Investments (1,872) (1,872) (4,976) (11,778) 1,186 8.32 1,239 8.44 4 ishares 4,676 4,676 21,304 88,773 855 5.99 813 5.54 5 T. Rowe Price 145 145 1,793 (1,703) 478 3.35 482 3.28 6 SPDR State Street Global Advisors (522) (522) 5,947 25,471 436 3.05 418 2.84 7 Franklin Templeton Investments (2,803) (2,803) (13,399) (41,307) 389 2.73 454 3.09 8 Pimco (952) (952) (6,144) (50,993) 301 2.11 359 2.44 9 Dimensional Fund Advisors 2,034 2,034 9,613 23,171 282 1.97 277 1.88 10 JPMorgan 676 676 (2,687) 4,852 269 1.89 275 1.87 11 BlackRock (1,066) (1,066) 432 (360) 230 1.61 239 1.63 12 MFS (100) (100) 256 331 180 1.26 182 1.24 13 OppenheimerFunds (706) (706) (2,792) (13,300) 176 1.24 202 1.37 14 Dodge & Cox (851) (851) (2,487) (6,961) 175 1.23 199 1.35 15 Columbia (107) (107) (2,838) (12,353) 142 1.00 161 1.10 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß
Morningstar Direct SM Publishing Date: 2016-05-13 Page 5 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Top Fund Families Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Assets Under Management ($bil) 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % 16 Invesco (125) (125) (709) (5,463) 142 0.99 153 1.04 17 Jackson National 345 345 2 5,145 126 0.88 126 0.86 18 John Hancock 501 501 279 6,874 124 0.87 123 0.84 19 Principal Funds 518 518 211 1,126 114 0.80 117 0.79 20 Janus (91) (91) (605) (3,683) 102 0.71 110 0.75 21 Wells Fargo Funds (601) (601) (3,098) (10,204) 101 0.71 114 0.78 22 Lord Abbett 765 765 804 (4,616) 101 0.71 108 0.73 23 American Century Investments 3 3 (42) (2,217) 100 0.70 103 0.70 24 AXA Equitable (419) (419) (1,822) (4,015) 97 0.68 103 0.70 25 TIAA-CREF Asset Management 893 893 2,621 6,863 92 0.64 87 0.59 26 Legg Mason 231 231 (537) (1,960) 91 0.64 95 0.65 27 Hartford Mutual Funds (317) (317) (1,236) (2,184) 90 0.63 96 0.65 28 SEI 633 633 684 3,157 88 0.62 88 0.60 29 PowerShares (2,230) (2,230) (3,797) (2,313) 88 0.62 92 0.63 30 Metropolitan West Funds 1,715 1,715 3,995 8,399 84 0.59 75 0.51 31 Goldman Sachs (1,288) (1,288) (4,637) (12,268) 83 0.58 102 0.69 32 Voya (521) (521) (2,330) (7,553) 81 0.57 91 0.62 33 Prudential Investments 351 351 484 (837) 77 0.54 81 0.55 34 Harbor (833) (833) (1,438) (4,493) 75 0.53 87 0.59 35 Oakmark (1,100) (1,100) (3,437) (6,025) 72 0.50 85 0.58 36 DoubleLine 1,449 1,449 7,498 14,924 71 0.50 55 0.37 37 First Eagle (173) (173) (1,329) (5,302) 71 0.50 76 0.52 38 Eaton Vance 620 620 690 (3,755) 65 0.46 71 0.48 39 Nuveen 774 774 2,326 2,625 65 0.45 62 0.42 40 Putnam (909) (909) (3,529) (8,254) 64 0.45 77 0.53 41 AllianceBernstein 281 281 2,477 1,353 64 0.45 63 0.43 42 Federated 170 170 319 (1,339) 63 0.44 66 0.45 43 GMO (867) (867) (3,625) (10,523) 62 0.44 78 0.53 44 USAA 1 1 (956) (1,185) 58 0.40 60 0.41 45 Dreyfus 313 313 401 (3,621) 57 0.40 63 0.43 46 Schwab Funds (163) (163) (458) 11 57 0.40 58 0.40 47 MainStay (770) (770) (2,489) (6,687) 57 0.40 67 0.45 48 Natixis Funds (440) (440) (1,638) (5,485) 55 0.38 64 0.43 49 Artisan (397) (397) (1,067) (4,696) 50 0.35 60 0.41 50 Thornburg (85) (85) (805) (1,812) 50 0.35 54 0.37 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß
Morningstar Direct SM Publishing Date: 2016-05-13 Page 6 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Top Fund Families Ranked by Current TNA ($Mil) Rank Name Estimated Net Flow ($mil) Assets Under Management ($bil) 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % Top 10 24,206 24,206 110,581 259,631 8,446 59.22 8,397 57.16 Top 50 19,610 19,610 86,361 156,974 12,187 85.44 12,388 84.33 Other (4,045) (4,045) (21,019) (71,332) 2,076 14.56 2,294 15.62 All 15,565 15,565 65,342 85,643 14,263 100.00 14,682 99.95 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß
Morningstar Direct SM Publishing Date: 2016-05-13 Page 7 Fund Flows Monthly Market Summary: US Open-end & ETF ex MM ex FoF Including merged and liquidated funds Effective Date 04-30-2016 Asset Classes Name Estimated Net Flow ($mil) Assets Under Management ($bil) 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % US Equity (9,882) (9,882) (27,651) (51,983) 5,993 42.02 6,201 42.21 Sector Equity (634) (634) (11,807) (3,737) 744 5.22 796 5.42 International Equity (1,510) (1,510) 18,250 114,960 2,322 16.28 2,488 16.94 Allocation (2,217) (2,217) (17,539) (51,207) 1,190 8.34 1,275 8.68 Taxable Bond 22,765 22,765 61,760 18,823 3,056 21.43 3,021 20.56 Municipal Bond 5,864 5,864 21,864 31,168 646 4.53 595 4.05 Alternative 504 504 7,336 17,042 223 1.56 225 1.53 Commodities 676 676 12,070 6,748 89 0.62 89 0.61 All Long Term 15,565 15,565 64,284 81,815 14,263 100.00 14,690 100.00 Morningstar Ratings Name Estimated Net Flow ($mil) Total Net Assets ($bil) 1-Mo QTD YTD 1-Yr 04-2016 Mkt Sh % 04-2015 Mkt Sh % QQQQQ 24,119 24,119 94,557 200,272 2,973 20.84 2,777 18.91 QQQQ 6,081 6,081 20,924 31,308 5,210 36.53 5,305 36.11 QQQ (6,048) (6,048) (33,447) (87,353) 4,184 29.33 4,488 30.55 QQ (14,249) (14,249) (47,099) (124,555) 1,202 8.43 1,430 9.73 Q (2,935) (2,935) (14,373) (45,121) 198 1.39 268 1.83 Not Rated 8,597 8,597 43,723 107,263 497 3.49 422 2.87 Total 15,565 15,565 64,284 81,815 14,263 100.00 14,690 100.00 2016 Morningstar, Inc. All Rights Reserved. For institutional use only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. ß