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Tuesday, January 03, 2017

A Record Year, On Multiple Levels

News summary by MFWire's editors

2016 was a record year in the mutual fund industry, in more ways than one. Fundsters may want to take heed as they gear up for 2017.

Kevin Quirk
Casey Quirk
Principal
Per new data released by BlackRock [profile] this morning, ETFs "won the year" by bringing in $375 billion in net inflows worldwide and $286 billion in the U.S. alone, both the biggest annual hauls ever. Passive mutual funds in the U.S. brought in $479.8 billion in net inflows last year, the Wall Street Journal reports, while investors pulled $358.8 billion out of active mutual funds in the U.S. (Vanguard, naturally, was a big beneficiary of those passive inflows.)

"What we've seen in the last 18 to 24 months really is unprecedented," Casey Quirk principal Kevin Quirk tells the Boston Globe.

Yet the news for active management was not all bad last year. In Q3 2016, Barron's reports, 44 percent of active large cap funds (and 52 percent of value funds) beat the S&P 500, "their best outperformance in nearly a decade." (IBD shared a list of the funds that shined the brightest last year.) And, while active funds overall suffered big net outflows, low-cost active funds (in the bottom 20 percent by price) flipped the script and brought in $26 billion in net inflows in the first 11 months of 2016.

Meanwhile, those flows numbers are driving product birth and death trends, too. 246 ETFs debuted in 2016, ETF.com reports, a 13.4 percent drop from 2015 but still "a perfectly respectable amount" in the trade publication's view. 13 of those ETFs have already crossed the $100-million mark.

On the flip side, Chuck Jaffe of MarketWatch reports, mutual fund liquidations doubled to 425 in 2016, and ETF liquidations rose more than 25 percent to 125. (Fund mergers gobbled up nearly 700 funds, too.) 

Edited by: Neil Anderson, Managing Editor


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