Monthly Fund Flows – Detailing Active and Passive Flows

Comment

The chart below shows the MSCI world stock market index in the top panel. The middle panel shows cumulative flows into open-ended mutual funds in blue and equity ETFs in red. The bottom panel shows the total assets of open-ended mutual funds in blue and equity ETFs in red.

Flows into ETFs since 2001 show an investor preference for passive investment vehicles over actively managed mutual funds.

The next chart is the same as the chart above except it covers the bull market from October 2002 to October 2007. Over this span, investors preferred actively managed mutual funds over passively managed ETFs.

The next chart shows the same metrics for the current bull market from June 2009 to present. As the middle panel shows, investors have preferred passively managed ETFs over actively managed mutual funds over this period.

The next chart shows the fixed income versions of the charts above. The top panel shows the yield of the Barclays Aggregate Index plotted inversely to mimic price movements. The middle panel shows the cumulative flows into ETFs in red and mutual funds in blue. The bottom panel shows the assets of both these categories.

Since 2001, the flows of actively managed open-ended mutual funds have dominated passively managed bond ETFs. This is the opposite preference of the equity funds above.

The next chart is the same as above but starts in September 2012 at the announcement of QE3.

The trend toward passively managed investments like ETFs started in 2009 with equity funds and 2012 with bonds funds. Either way, we’re all passive investors now.

General Overview:

The table below shows the combined flows and assets of the major categories of mutual funds and ETFs.

The chart below shows the combined flows and assets of all long-term mutual funds and ETFs.

Long-term funds can be broken down into equity funds, bond funds and hybrid funds. Each is shown below.