Micro Fund Firms' Flows Share Septuples
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Thursday, April 18, 2019

Micro Fund Firms' Flows Share Septuples

The smallest fund firms dramatically increased their flows marketshare last month, largely on the strength of two big winners.

Peter S. Kraus
Aperture Investors
Chairman, CEO
This article draws from Morningstar Direct data on March 2019 open-end mutual fund and ETF flows (excluding money-market funds and funds of funds). Specifically, this article focuses on the 520 firms (two fewer than in February) with less than $1 billion in AUM each (in mutual fund and ETF AUM). 225 of those firms gained net inflows in March, down from 240 in January.

DWS' DBX Advisors led the sub-$1-billion-AUM pack last month, bringing in an estimated $872 million in net March inflows. Other big March winners included: Aperture Investors, $352 million; Inspire, $84 million (up from $11 million in February); AAAMCO, $66 million (up from $18 million); and AssetMark's GuideMark, $59 million (up from negligible net outflows).

Proportionately, setting aside apparent newcomers, Defiance led the pack with estimated net March inflows equivalent to 67.48 percent of its AUM, up from 24.87 percent in February. Other big March inflows winners included: Renaissance Capital, 48.85 percent (up from 6.91 percent); Innealta Capital, 46.79 percent (up from 0.01 percent); Cadence Capital, 41.54 percent (in its second month on M*'s charts); and Aware, 33.67 percent (down from 74.47 percent).

March's apparent newcomer fund firms included: Aperture, BFA, DBX, Hoya Capital Real Estate, and RYZZ Capital Management.

On the flip side, March was a rough month for Kaizen, which suffered an estimated $184 million in net outflows, more than any other sub-$1-billion-AUM fund firm and up from up $14 million in February. Other big March outflows sufferers included: AssetMark's GuidePath, $143 million (down from $2 million in net inflows); Altegris, $83 million (up from negligible net outflows); Longboard, $65 million (up from $16 million); and RQSI, $51 million (down from negligible net inflows).

Kaizen also led the March outflows pack proportionately, suffered estimated net outflows equivalent to 30,199.61 percent of its month-end AUM (i.e. its March outflows were nearly 302 times larger than the AUM it had left after those outflows), up from 7.44 percent in February. Other big March outflows sufferers included: Barrow, 1,866.06 percent (up from 4.06 percent); Point Bridge, 108 percent (up from 1.92 percent); GuidePath, 90.99 percent (down from 0.65 percent in net inflows); and AlphaOne, 75.64 percent (up from 13.88 percent).

As a group, the 520 fund firms with less than $1 billion each in fund AUM brought in a combined $696 million in estimated net inflows in March, equivalent to about 0.73 percent of their combined AUM and accounting for 1.57 percent of net industry flows. That's up from $112 million in net February inflows, which accounted for 0.21 percent of net industry flows.

Across the whole industry (M* tracks flows from 779 firms), long-term mutual funds and ETFs brought in a combined $44.191 billion in estimated net inflows in March, equivalent to 0.24 percent of industry AUM. Passive funds brought in $49.46 billion in net inflows, while active funds suffered $5.269 billion in net outflows.

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