After plunging in February, mutual fund and exchange-traded fund assets are set to tumble even further in March as a result of the stock market crash that started last month amid the coronavirus crisis, according to Cerulli Associates.
More than $775 billion in assets was “wiped out” of mutual fund strategies in February, representing a one-month decline of almost 5%, the research firm said Wednesday.
Despite those massive losses, active ($7.4 billion) and passive ($7.8 billion) mutual fund strategies added net flows last month, according to the firm’s latest The Cerulli Edge—U.S. Monthly Product Trends report.
Taxable-bond mutual funds continue to be a destination for investors, with $55.2 billion in net flows through February — the most of any asset class, according to Cerulli.
The top 10 mutual fund managers closed February at just less than $10 trillion, after posting an all-time high of $10.5 trillion at the end of January, according to the report.
ETF assets plunged in February, declining almost 7% to $4.1 trillion, Cerulli said. The sharp drop was tied to the fact that most ETF assets (76%) are in equity strategies, it noted, but pointed out that net flows into the vehicle remained positive at $11.5 billion.
Of the four segments of active and passive mutual funds and ETFs, only active ETFs had growth in assets last month, it said. The segment had only $108 billion in assets, but that was up 3.1% from January, thanks largely to an “injection of $4.3 billion in net flows” in February, it said, adding: “The other three segments suffered significant declines in 2020, with active mutual funds down 4.4%, passive mutual funds down 5.9%, and index ETFs down 7.2%.”
The taxable bond category, meanwhile, has significantly expanded its proportion of the U.S. ETF industry over the last year as advisors continued to increase their use of such ETFs, the firm said.
Moving into early March, equity market losses accelerated, ultimately tumbling more than 20% from all-time highs, ending the 10-year bull market, it noted.