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Portfolio > Mutual Funds

This Fund Giant Is Bleeding Assets

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What You Need to Know

  • Actively managed U.S. funds are on pace for their worst year, Morningstar says.

Nearly $10.8 billion in assets left Fidelity funds in November, the biggest outflow among large U.S. fund families, Morningstar reported recently.

The move came in a month when U.S. mutual and exchange-traded funds saw about $53 billion in outflows combined — the third straight month with net outflows — continuing a “dismal year” in which over a quarter of a trillion dollars have exited the funds, Morningstar said.

ETFs, however, attracted $54.8 billion in inflows in November and gathered more than $543 billion in 2022 through November, according to the report. (Bloomberg reported last week that investors are running to ETFs from traditional mutual funds, leaving a $1.5 trillion gap between the two fund types.)

More than $95.6 billion left actively managed U.S. funds last month, while $42.6 flowed into passive funds, Morningstar reported. Among ETFs, however, even actively managed funds gained assets in November.

“Firms that offer both active and passive funds have mostly counted on their index trackers to keep them afloat. Fidelity fits that description, but its passive products didn’t hold up their end in November, shedding $4.6 billion,” according to Morningstar.

Fidelity’s active funds saw a nearly $6.2 billion outflow last month.

BlackRock’s ETF family, iShares, led the group in inflows, drawing nearly $20.5 billion last month; more than $20.6 billion in passive-fund inflows more than offset the $151 million in actively managed outflows.

Vanguard experienced $4.1 billion in net inflows last month, with $13.9 billion in passive fund inflows outpacing the mutual fund giant’s nearly $9.8 billion in active fund outflows, Morningstar reported.

Invesco took in more than $3.6 billion last month, with nearly $6.6 billion flowing into passive funds and close to $3 million leaving active funds.

American Funds saw nearly $8.7 billion in net outflows, followed by T. Rowe Price at more than $4.2 billion and Franklin Templeton with more than $3.9 billion.

U.S. funds have seen outflows for seven of the eight past months, Morningstar reported.

Actively managed funds are on pace for their worst year for organic growth since Morningstar started tracking data in 1993, driven by a huge exodus from actively managed bond funds, according to the report. Flows into passive taxable bond funds have more than offset these outflows, resulting in a net $1.3 billion gain for the taxable bond fund category in November.

More than $31 billion exited U.S. equity funds in November, as large blend and large value funds both experienced major outflows, a departure in an otherwise largely resilient year for the group, according to the research firm.

Image: Shutterstock


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