Active Funds Get Beat Bad (Again), But …

401k, retirement, passive, active, mutual funds

Portfolio managers are taking it personally, apparently.

“Passive beats active” is by now rote. However, Morningstar finds that, in a pattern reversal, alternative and commodities funds saw passive management outflows and active management inflows in July, signaling a taste for the tactical from investors in the non-correlated portions of their portfolio.

Overall, equity remained in outflow territory, losing $19.6 billion in redemptions from active funds, compared with $14.6 billion in the previous month. Passive funds had inflows of $10.8 billion, up from $9.3 billion in June, according to the Chicago-based research behemoth.

Taxable-bond and international equity categories hit big, with inflows of $34.7 billion and $23 billion, respectively, the majority of which came from passive funds.

In its July World Economic Outlook Update, the International Monetary Fund reduced the U.S. GDP growth forecast for 2017 to 2.1 percent from 2.3 percent, while raising Europe’s expected growth rate to 1.9 percent from 1.7 percent.

Additional findings include:

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