BMO Capital Markets analysts David J. Chiaverini and Richard Fellinger look at mutual fund and ETF flows in light of recent data with a focus on BlackRock and T. Rowe Price.

In this report we review February mutual fund and ETF flows for investment companies following Morningstar’s monthly update to its database. We provide views on overall industry trends as well a deeper look at the traditional asset managers we cover.

ETFs

Key takeaways include:

1) Investors contributed a robust $69B to long-term mutual funds and ETFs in February. Overall inflows were the highest level since the record-setting January 2013 and improved nicely over the $22B last month. Flows were among the most balanced we’ve seen across asset classes (equity/fixed) and vehicles (MF/ETF).

2) BlackRock, Inc. (NYSE:BLK), Invesco Ltd. (NYSE:IVZ), and T. Rowe Price Group Inc (NASDAQ:TROW) all had strong flows in the month. Eaton Vance Corp (NYSE:EV) and Legg Mason Inc (NYSE:LM) both had outflows in the month, but were very modest (~$100 million each). 3) We are leaving our estimates and price targets unchanged, as we believe AUM is back to running roughly in line with our modeled estimates owing to strong market appreciation in February.

blackrock 1

BlackRock 2

BlackRock and T. Rowe Price do not report monthly AUM

For BlackRock, Inc. (NYSE:BLK), the flow picture is challenging to track accurately given the products utilized by its large institutional client base are not captured in the Morningstar data. However, from available ETF data, iShares had a strong month with $8.2B of outflows. For the first time since August 2012 however, flows were driven by fixed income products as the asset class had $11B of inflows compared to $2.5B of outflows from equity. BlackRock mutual funds continued to have solid inflows (+$2B) as the trend remains fixed income and balanced fund inflows offsetting equity outflows.

blackrock 3

T. Rowe Price Group Inc (NASDAQ:TROW) mutual fund flows were once again very strong in February, with inflows of $2.2B, though modestly below the $3.4B last month. We estimate sponsored equity/balanced mutual fund inflows of $1.7B in the month ($3.8B QTD) and bond/money market inflows of $0.5B ($1.8B QTD).

T rowe