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 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.
