ETFs and index funds certainly are winning the war for your money

Posted on: 11/13/2014

The following was posted on ETF Network Group on LinkedIn by   Managing Partner, ETFGI, global ETF, ETP research and consulting.

ETF Network (Exchange Traded Funds and Exchange Traded Products)

 

The bad times are back for actively managed U.S.-stock mutual funds, writes Jonathan Burton.

Scott Jones, Director of Business Development – iSectors®, LLC comments: “Money natural flows to where it is treated best. Investors are the ultimate sounding board and in this case they’re clearing saying that their money is being treated best by investing in ETF’s and Index Funds vs Actively Managed Mutual Funds. The supporting evidence for this change in behavior is understandable and a clear indication of where the future growth will be.”

Published: Nov 4, 2014  Read the article

How ETFs and index funds are winning the war for your money

Poor performance, high costs hit active stock fund managers
By JONATHAN BURTON

Daniel Hertzberg

The bad times are back for actively managed U.S.-stock mutual funds.

Investors had been pulling huge and growing amounts of cash out of these funds each year for almost a decade, even as the U.S. market hit new highs. Then they withdrew only a relatively modest sum in 2013, likely because domestic stocks were robust and showed lower-than-average volatility, says Shelly Antoniewicz, senior economist at the Investment Company Institute, the mutual-fund trade group.

Now the respite is over — and investors are making up for lost time. Actively managed U.S.-stock funds have seen more selling than buying for seven consecutive months, with about $70 billion out the door for the year through September, according to estimated data from investment researcher Morningstar Inc.

‘Active management has never been in worse repute’

John Rekenthaler, vice president of research at Morningstar.

Yes, investors are still sinking money into U.S. stocks. But increasingly they are doing it through traditional index mutual funds and exchange-traded funds that track a specific market benchmark or sector, without the variability of a fund manager’s hand. While active stock funds have been seeing uninterrupted outflows, passive U.S.-stock funds have collected inflows for eight months in a row.

Meanwhile, other broad categories are booming, too. Investors are piling into bond funds and both active and index international-stock funds.

Read the article here.



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