Advisors can’t count on organic growth anymore, a reality reflected in Cerulli Associates’ 2018 roundup of mutual fund and ETF flows. Overall, mutual funds lost $156.8 billion in flows, while ETFs added $319.1 billion.
Active funds were the true losers, with $300 billion in net outflows, while index products added $462.2 billion, according to Cerulli. Active mutual funds had $327.3 billion pulled, $144 billion of that in December alone, the report states.
Fixed Income was a big winner as people moved to safety. In fact, Cerulli noted that “more than half of the top-10 Morningstar categories by mutual fund and ETF net flows are fixed income categories.”
However, Cerulli found several areas of growth: “Based on high-level flow figures, one could draw the conclusion that opportunity to gather net flows lay within index ETFs and mutual funds in 2018, but peeling back the onion reveals more significant pockets of organic growth opportunity, including within mutual funds,” the report stated.
These “opportunities” included:
1) Large blend and foreign large blend funds favored index mutual funds and ETFs, having net inflows of $221.8 billion. Also, active ETFs had $542.2 billion in flows.
2) Ultrashort bond funds favored active mutual funds and ETFs, but also index ETFs, bringing in $87.3 billion.
3) Muni national intermediate saw a net inflow of $16.6 billion, mainly to actively managed mutual funds.