Investing

Passive Strategies Continue to Lead Investor Demand

However, movement out of actively managed funds was not as severe in January, Strategic Insight finds.

By PLANSPONSOR staff editors@plansponsor.com | February 16, 2017

Long-term mutual funds and exchange-traded products (ETPs) experienced net deposits of $58.1 billion in January, a significant improvement over the $5.6 billion in net deposits seen in December, according to Strategic Insight, parent company of PLANSPONSOR.

Passive strategies continued to lead demand among long-term funds with inflows of $71.9 billion (including $39.2 billion to ETPs). While actively managed funds experienced aggregate net redemptions of $13.7 billion, these outflows were much less severe than the $63 billion in outflows actively managed long-term funds experienced in December.

Taxable Bonds experienced the highest net deposits among long-term funds at $32.9 billion. Taxable Bond funds experienced net inflows in both passive ($22 billion) and active ($10.9 billion) segments. Tax-Free Bond funds in January experienced a rebound in net flows of $4.4 billion after having seen net outflows of $16.3 billion in December.

International Equity funds led Equity funds overall with $15.3 billion in net deposits. Domestic Equity funds meanwhile saw inflows of $5.5 billion. Equity outflows were concentrated among active products ($28.7 billion) while passive Equity funds experienced inflows of $49.5 billion.

Money Market funds experienced net redemptions of $44.6 billion in January, primarily through outflows from Taxable Money Market funds. Prime Money Market funds had been the leading contributor to outflows from Taxable Money Market funds throughout 2016. But, in January, Prime Money Market funds saw inflows of $5.8 billion, while Government and Treasury Money Market funds led outflows at $30.5 billion and $20 billion, respectively.

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