Exchange-traded funds enjoyed strong gains in December and the fourth quarter, according to a new report.
Sterne Agee, New York, published this finding in a January survey of U.S. mutual and exchanged-traded funds. The report details industry- and company-specific mutual funds, flows and performance trends.
ETFs in December, a seasonally strong month, generated $16.4 billion of inflows or an organic growth rate of 18.7%. For the quarter, ETF inflows totaled about $40 billion (15% organic growth rate).
For the year, long-term mutual funds generated $70 billion of inflows (1.5% organic growth) as $40 billion of domestic equity outflows offset $160 billion of fixed income inflows and $53 billion of international equity inflows.
"We believe a portion those domestic equity fund outflows found their way into ETFs, a trend we anticipate will continue," the report's authors write.
The report reveals that organic growth of U.S. mutual fund assets deteriorated in December, as a reflected in a 3.3% attrition (turnover) rate for the month. For the quarter, the industry posted a 1.2% annualized attrition rate.
The survey adds that domestic equity attrition rates totaled nearly 5% for the month and 4% for the quarter. But a smaller pool of assets, international outflow rates, were higher at 8% and 3% on a monthly and quarterly basis, respectively.
Taxable bonds enjoyed an organic growth of 7.4% in December and 9.0% for the quarter, the report says. Municipal bonds posted 10.4% organic growth for the month and 7.1% in the quarter.
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