November Fund Flows Underscore Active-Passive Shift

Strategic Insight’s monthly fund flow report for November 2016 shows active and passive strategies continued to experience divergent trends in net investments.

Passive funds led demand with $67.7 billion of inflows (including $49.4 billion to exchange-traded products), while actively managed funds experienced aggregate net redemptions of $63.9 billion in November.

During the month, domestic equity funds saw the strongest demand among long-term funds, attracting net inflows of $21.1 billion. This segment has experienced net outflows of $39.5 billion in the year-to-date period through November, however. International equity funds saw net redemptions in November ($4.8 billion) and the year-to-date period ($19.2 billion).

Regarding taxable bond funds, Strategic Insight says they experienced outflows of $1.8 billion in November, while tax-free bond funds saw outflows of $10.7 billion. Strikingly, November represents the only month in 2016 that tax-free bond funds experienced net redemptions, while taxable bond funds have only seen outflows in January and November of 2016.

Money market funds experienced a significant increase in net deposits to $54.8 billion in November from $6.0 billion in October. Taxable money market funds, in particular, were responsible for most of this increase with net inflows of $53.0 billion.

Strategic Insight concludes the biggest difference in November from the rest of 2016 was that prime money market funds experienced moderate inflows ($220 million). The segment had seen significant net redemptions throughout 2016 because of pending regulation which ultimately came into effect in October.

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