2019 Hot Take #1: Mutual fund outflows will continue and accelerate if the market pulls back.

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Asset managers not doing enough to combat this trend. Need to invest in tech to show value

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I think if we see heavy volatility, and extended trouble in tech we may see active funds see more inflows. Tech has driven so much growth that it could come back to bite indexes

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Good question! The flows in the chart are just gross flows of mutual funds, not specifically flows from those funds into ETFs.

The data more broadly seems to indicate that the flows initially move from mutual funds to cash but that when those dollars make it back into the market, it’s fewer dollars into funds than left for cash in the downturn

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Interesting. An investor singly approaches reinvesting with their own version of a dollar cost average, another investor stays out much longer. Thank you for this because it’s data, a tool, to use when either explaining value to a prospect that might be considering doing it themselves, and a conversational point to make when a client wants to go to cash just because the market goes down and you ask them what goes back up. It sounds as if a lot of people might have been having this conversation anecdotally, which means this is valuable information because a smart person will always want to be able to cite supporting evidence of their claims.

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Stranglehold on the obvious...

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We have been asked if a market pullback might reverse the long-term trend of outflows from actively managed mutual funds but, as the below chart shows, fund outflows have historically accelerated during downturns and failed to recover those flows later

Post Photo

In other news, water is wet. Of course that will happen when all the low information investors see a pullback as anything but a buying opportunity .

Duh

Are the mutual fund outflows referenced indicated to show relative flows from active management relative to passive ETFs?

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