The U.S. mutual fund business has enjoyed both growth of assets under management and robust performance in the year since the presidential election, Thomson Reuters Lipper reported this week.
Many investors, the report said, still appear to expect the broad tax reform and infrastructure development promised by the Trump administration.
For the 12-month period ended Sept. 30, total net assets under management of U.S. mutual funds — including exchange-traded funds — increased by 16.1%, from $18.2 trillion to $21.1 trillion.
Among six broad-based asset types, equity funds experienced the biggest absolute increase, up 21.6% to $11.4 trillion. Bond funds followed, up 11% to $4.2 trillion.
Money market funds’ total net assets increased by 3.8% to $2.6 trillion, and the total net assets of mixed assets grew by 19.6% to $2.4 trillion.
Only alternatives and commodity funds experienced declines in total net assets, down 0.5% to $372 billion and 8.1% to $91.8 billion, respectively.
The report said performance was the chief contributor to asset growth.
Since Sept. 30, 2016, mutual funds have attracted some $691.2 billion, of which $686 billion went into passively managed funds.
Investors appeared to favor bond funds over other asset types, pouring $337.2 billion into their coffers — $191.3 billion entering passively managed bond funds and $145.9 billion going to actively managed ones.
For equity funds, the next largest attractor of investor assets, investors injected $498.5 billion into passively managed equity funds, while pulling $236 billion from actively managed equity funds.
The average mutual fund (inclusive of all asset types) posted a one-year return of 15.9% for the period ended Oct. 3.
The report noted that even bond funds managed to remain in the plus column over this period against a backdrop of investors bidding up risky assets in spite of a more hawkish U.S. Federal Reserve and recent interest rate hikes.
Are bond buyers rationalizing the unrealistic?
Here’s the one-year performance breakdown through Oct. 3 by Lipper Macro-Groups, according to Thomson Reuters Lipper:
- Emerging markets funds – 27%
- U.S. diversified equity funds – 26.7%
- Developed international markets funds – 25.4%
- Sector equity funds – 16.9%
- Mixed-asset funds – 16.3%
- World taxable fixed income funds – 5%
- Alternatives funds – 4.7%
- Taxable fixed income funds – 3.4%
- Commodities funds – 3.2%
- Municipal debt funds – 1.1%
- Money market funds – 0.4%
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