As a category group, U.S. equity funds gathered the most assets in March. They took in $54 billion, dwarfing the previous monthly record of $38 billion set in February 2021. Their month-over-month organic growth rate of 0.49% was the highest since October 2013's 0.53%. Resurgence in investor appetite for cheap stocks drove the inflows. Investors poured into value-oriented and cyclical funds at some of the sharpest rates in history. Large-value strategies collected a whopping $20 billion, by far the largest sum ever. Their 1.47% organic growth rate in March was the highest since the 1.68% mark set in January 2004. Small-value strategies achieved a similar feat, picking up $5.4 billion, more than double January 2017's previous record of $2.2 billion. The 2.77% organic growth rate was the highest since April 2002, a period when investors were reeling from the dot-com bubble crash.
Despite investors' push into value-equity strategies, the influx of cash hasn't exactly been a windfall for active managers. Actively managed large-value funds took in just $2.2 billion of the category's $20 billion in total inflows in March, breaking their streak of 78 consecutive months of outflows totaling $318 billion. Prominent passive funds such as iShares Russell 1000 Value ETF (IWD) and Vanguard Value Index (VVIAX) collected as much or more in March than all active managers just by themselves, pulling in $2.2 billion and $2.8 billion, respectively. Investors gave active small-value managers more credit than their active large-value counterparts, handing them $1.4 billion of the category's $5.4 billion total inflows.
~ Morningstar Research, March 2021
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