F.R.E.A.M.: An Early Look at May '26 & 2Q26 Traditional Asset Manager Flows

Research evidence excerpt

F.R.E.A.M.: An Early Look at May '26 & 2Q26 Traditional Asset Manager Flows

May was weak for active funds and was driven by another large equity

redemption month. Active equity outflows worsened sequentially versus

April and remained negative, reinforcing that active equity persists as the

structural drag in the industry. The weakness was broad across U.S.,

developed market & emerging market equity categories, with May standing

out as one of the larger negative months in the recent period. Active fixed

income was a partial offset and improved m/m in May, with investment

grade, global & munis contributing positively while high yield was less

supportive.

ETFs continued to be the strongest part of the industry in May, with total

ETF flows positive again and broad-based across equity & bond ETFs. May

was lower than April, but still consistent with the stronger ETF run-rate that

has developed over the past year and above the earlier 2024–early 2025

trend. Equity ETFs remained the largest contributor, while bond ETFs

added another positive month, continuing the pattern of ETF demand being

consistently positive even as active equity funds lose assets.

What Areas Are Seeing Flow Demand Specifically For the Publics

(Figs 11-16)? May fund flows were positive overall with a constructive tone,

but not indiscriminately risk-on. Investors continued to favor highly liquid,

index-based exposures, with inflows concentrated in large passive vehicles

tied to the Nasdaq 100, S&P 500, semiconductors, software & broad

developed-market equities. At the same time, fixed income demand

remained robust, particularly in short-duration U.S. Treasuries, aggregate

bond & muni bond strategies, suggesting that investors continued to pair

equity risk with high-quality income & liquidity exposure.