Why Mutual Funds Are NOT Facing Extinction

mutualfundDavid Fabian:  I recently came across an interesting article from Matt Turner over at Business Insider on how Mutual Funds Are Facing Extinction

The gist of the post is that passively managed ETFs are taking over a greater market share from the likes of underperforming actively managed mutual funds.

That’s absolutely true and has been a well-known trend throughout the industry for a decade or more now.

However, that doesn’t mean that we are going to see the end of all mutual funds as we know it.

In fact, there are many mutual fund companies and managers that are thriving in this environment.

  • Vanguard has continued to attract billions this year into its lineup of passive and active mutual funds.  They get a ton of press for their ETF flows, but that doesn’t mean investors are sleeping on their mutual fund equivalents either.  According to this recent analysis by Morningstar, Vanguard has attracted an estimated $92.8 billion in new assets to its lineup of ETFs and mutual funds on a year-to-date basis.
  • Dimensional Fund Advisors is another favorite low-cost mutual fund provider that has added $9.6 billion this year as well.
  • American Funds is a well-known mutual fund company that offers a lineup of actively managed funds.  They have added $6.2 billion year-to-date according to Morningstar and are now the number two fund company in total assets (surpassing Fidelity).
  • DoubleLine is renown for their actively managed suite of fixed-income mutual funds.  Jeffrey Gundlach’s firm has added $7.5 billion in 2016 and looks on pace to surpass $100 billion in total assets this year.  We use several of their ETF and mutual fund offerings for clients of our firm.

The more important theme throughout this migration is that investors aren’t abandoning mutual funds completely.

They are largely moving towards lower cost funds with a passively managed mandate or towards active funds with a superior value proposition – i.e. performance, strategy, risk management, etc…

It should also be noted that mutual funds still make up the overwhelming majority of workplace retirement plans such as 401(k)’s.

ETFs are starting to make some headway in this arena, but still have a long way to go to displace traditional open ended mutual funds.

(…)Click here to continue reading the original ETFDailyNews.com article: Why Mutual Funds Are NOT Facing Extinction

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

Powered by WPeMatico