ETFs are way up, mutual funds way down.
Long-term, open-end mutual funds are on track for their worst calendar year ever after suffering $317 billion of outflows so far in 2020, according to Morningstar.
ETFs, by contrast, have raked in $313 billion for the year to date. That is by far the widest asset-flows disparity between the two investment types since 1993, the firm notes.
In a month when the S&P 500 index reached a new all-time high on Sept. 2, 2020, before pulling back, long-term mutual funds and ETFs saw inflows of $13 billion in September, marking the sixth consecutive month of inflows.
Separately, open-end mutual funds had $22 billion of outflows while ETFs collected $34 billion.
Money market funds, which had windfalls earlier in the year amid the market tumult, also had outflows of $117 billion in September.
Looking at the third quarter of 2020, these funds had a hefty $223 billion of outflows, the most since 2010’s first quarter but only a fraction of the $1.5 trillion they collected from April 2019 through June 2020.
Investors continued to pull money out of U.S. equity funds in September. Although the $21 billion that left U.S. equity funds in September was the smallest amount since April’s $18 billion, the group suffered record quarterly outflows of $119 billion.
Allocation funds marked 64 consecutive months of outflows in September, with the world allocation category accounting for half of the month’s $8.3 billion in net redemptions.
Top-performing find families
Vanguard retained the top spot among fund families with approximately $11.7 billion of inflows, with inflows on both the active and passive fronts during the month. The firm benefited from investors’ interest in taxable-bond funds; Vanguard’s offerings in that category collected more than $13 billion. Dimensional Fund Advisors’ $4 billion of outflows in September was the most among fund families. The firm has had at least $2.6 billion of outflows every month since March 2020.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.
