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Mutual Fund Flows Beat ETFs in June: Cerulli

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Flows into fixed income funds remain steady in 2017 despite attempts from central banks to tighten monetary policy, making 2017 a prosperous year for fixed income managers, according to Boston-based research firm Cerulli & Associates.

The June 2017 issue of The Cerulli Edge – U.S. Monthly Product Trends Edition reports that, bolstered by positive net flows moving into active mutual funds ($7.7 billion), total mutual fund flows ($35.6 billion) outpaced ETFs ($33.0 billion) for the first time since February 2016.

Flows and strong global capital markets contributed to asset growth of 1.4% during the month, ending May at $13.5 trillion. ETF asset growth eclipsed 2% for the second straight month as assets increased to more than $2.9 trillion.

The research found that 50% of advisors plan to increase their use of fixed income ETFs over the next three years, while roughly 40% of advisors plan to decrease their use of fixed income mutual funds over that period, prompting some fund managers to consider developing active fixed income in the ETF wrapper.

A recent Cerulli study also found that a growing number of advisors are turning to fixed income ETFs to help navigate the challenges posed by low interest rates and increasing market volatility.

Usage rates among fixed income ETF users are highest within investment-grade (77%), short-term (70%), and high-yield bonds (67%).

However, advisors expect the greatest increase (37%) to floating-rate ETFs over the next three years, Cerulli reports. 

— Check out Target-Date Managers Expect to Offer Strategic Beta on ThinkAdvisor.

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