The second quarter saw net inflows of $614.0 billion into managed vehicles, according to data from ISS MarketPulse Total Market powered by Simfund. This served as a slight increase from the comparatively restrained first quarter when funds gathered $486.9 billion. ETFs were the strongest contributor to net deposits in the second quarter, while both mutual funds and CITs saw net inflows surpass $100 billion.
Leading retail SMA categories experienced relatively muted demand in the second quarter, as did other U.S.-domiciled vehicles. Large Blend flows totaled $5.7 billion in Q2, down from $10.0 billion seen in Q1. Market appreciation was strong enough during the second quarter that the category surpassed Municipal Fixed Income as the largest category among retail SMAs at $352.2 billion. Municipal Fixed Income followed in both assets ($331.7 billion) and flows ($2.7 billion) in Q2. While those flows were a significant drop from the $22.1 billion brought in during Q1, that quarter had seen exceptionally high demand. Still, the category’s recent flows were below levels seen in Q3 2024 ($11.8 billion) and Q2 2024 ($7.0 billion). Only three other strategies experienced net deposits above $1.0 billion for the quarter.
For coverage of industry-wide activity and a deeper dive into mutual funds and ETFs, read our blog post: U.S. ETFs and Asian Money Markets Lead Global Fund Flows in Q2.
The second quarter saw a balance of asset classes represented in the leading inflow categories from retail SMAs. The rankings included four equity, five fixed income, and one allocation category. BlackRock gathered the highest inflows into retail SMAs in the quarter at $4.4 billion, primarily through strategies in Flexible Allocation ($2.3 billion) and Global Equity Large Cap ($1.1 billion) categories. Morgan Stanley followed as the next highest inflow manager, primarily through Large Blend ($2.4 billion).
Large Blend served as the top inflow category for CITs in Q2 2025, gathering $27.7 billion in line with the $24.6 billion recorded in the first quarter. Passive CITs were the primary contributor to the category’s quarterly flows and accounted for $24.5 billion, compared to $3.2 billion for active Large Blend CITs. State Street Investment Management gathered the highest net commitments in the category at $19.7 billion, a notable increase from net inflows of $12.8 billion in Q1. Geode Capital Management experienced the second highest Large Blend inflows at $14.3 billion. Both firms recorded net deposits in the category overwhelmingly through passive S&P 500 products. Capital Group acted as the third highest inflow manager for the category at $1.8 billion and the highest inflow active Large Blend manager.
Target-date funds ultimately accounted for a larger portion of quarterly inflows, as CITs play a core role in defined contribution retirement plans. Net deposits into all target-date funds totaled $55.6 billion in the second quarter, a significant boost from $35.4 billion and the highest period of quarterly inflows in two years. State Street Investment Management also led Q2 target-date inflows at $16.2 billion, followed by Capital Group ($10.2 billion) and BlackRock ($7.5 billion).
Institutional separate accounts have experienced similar sales trends as mutual funds, with substantial outflows from equity strategies and pockets of demand within fixed income. Seven of the quarter’s leading inflow categories focused on fixed income securities. Global Fixed Income led inflows during the quarter by a wide margin at $23.4 billion, a substantial boost from Q1 net deposits of $6.9 billion. Multiple asset managers benefited from this surge in demand, with flows into the category led by Morgan Stanley ($6.4 billion), Natixis ($5.3 billion), and PIMCO ($4.7 billion). The quarter also saw other international bond representation through Emerging Markets Fixed Income. It served as the third highest-inflow category of the quarter at $3.8 billion, rebounding from Q1 net redemptions of $4.4 billion. PIMCO gathered the highest inflows in the category at $2.6 billion, followed by TCW ($2.1 billion). Other leading inflow bond strategies focused on the U.S. intermediate-term market, including Intermediate Government ($4.7 billion), Intermediate Core-Plus Bond ($3.4 billion), and Intermediate Core Bond ($1.0 billion).
Demand for global and international strategies was not limited to fixed income in the second quarter. Among equity strategies, international strategies played a leading role. Global Equity gathered inflows of $3.5 billion in Q2, effectively mirroring the $3.6 billion in net outflows it had experienced the prior quarter. Japan Equity meanwhile experienced net deposits of $2.0 billion, a marginal improvement over Q1’s $1.2 billion.
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By Alan Hess, Vice President, U.S. Fund Research, ISS Market Intelligence
