Asset growth in fund products is still going strong, but investors are taking a greater interest in exchange traded funds, compared to traditional mutual fund investments.
In the U.S., the fund industry gathered $434 billion over 2012 as open-end funds regained their pre-crisis levels and ETFs saw record breaking inflows.
Looking at the fund flows, Morningstar found two dominant themes.
“The quest for fixed income and apparent permanent preference for less expensive funds — typically exemplified by the movement of assets to passive products — have transformed the economics of the industry,” Morningstar said.
Passive funds now make up 26% of total open-end and ETF assets, compared to 12% a decade ago.