On the other hand, stock mutual funds in the U.S. posted $328 million in outflows for the week ended April 6.
The outflows may reflect investors’ growing dissatisfaction with active managers’ ability to beat their indices. Less than one in five large-cap funds outperformed the benchmark S&P 500 Index, the lowest number of beats since at least 1998.[related_links]
According to EPFR data, actively managed equity funds experienced $34.9 billion in net outflows globally this year, whereas global stock market ETFs, which passively track a benchmark index, have attracted another $7.6 billion, despite the volatility in the first quarter, Financial Times reports.
The ongoing underperformance in active funds has accelerated a shift toward passive strategies like ETFs. Last year, ETFs brought in almost $200 billion while actively managed equity funds lost $124 billion.
“It doesn’t surprise me that we’re getting this continuous move towards passive investment,” Mohamed El-Erian, chief economic adviser to Allianz, told the Financial Times. “Active funds have disappointed investors, and in a low-return environment costs become more important.”