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Bob Carey
Chief Market Strategist
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  Passive vs. Active Fund Flows
Posted Under: Conceptual Investing
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View from the Observation Deck

  1. Investors directing capital into mutual funds and exchange traded funds (ETFs) continued to favor passive investing over active management on a massive scale for the 12-month period ended 6/30/22. This has been the case for the past several years.   
  2. Passive mutual funds and ETFs reported estimated net inflows totaling $744.28 billion for the period captured in the table above, down from $765.48 billion at this point a year ago. Active funds reported estimated net outflows totaling $373.40 billion, up from $280.67 billion in outflows at this point a year ago.   
  3. The largest amount of total net inflows (active + passive) in the period belonged to the International Equity, U.S. Equity, Alternative and Taxable Bond categories at $150.46 billion, $143.05 billion, $44.06 billion and $35.68 billion, respectively. 
  4. The active categories garnering the most interest from investors by far over the past 12 months via net inflows were Alternative, Nontraditional Equity and Commodities.  
  5. Despite the declines in the major global stock indices for the 12-month period ended 6/30/22, investors funneled more capital into equities than any other category.  
  6. The S&P 500, S&P MidCap 400 and S&P SmallCap 600 Indices posted total returns of  -10.62%,  -14.64% and  -16.81% respectively, for the 12-month period ended 6/30/22, according to Bloomberg. With respect to foreign equities, the MSCI Daily TR Net World (ex U.S.) and MSCI Emerging Net TR Indices posted total returns of  16.76% and  25.28%, respectively.
  7. The U.S. Dollar Index (DXY) rose by 13.25% for the 12-month period ended 6/30/22, according to Bloomberg. The index reflects the general international value of the dollar relative to a basket of major world currencies. The index being up that much means the dollar provided significant drag on the performance of unhedged foreign securities held by U.S. investors, in our opinion.  

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P SmallCap 600 Index is a capitalization-weighted index that tracks U.S. companies with a small market capitalization. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI World (ex U.S.) Index is a free-float weighted index designed to measure the equity market performance of developed markets. The U.S. Dollar Index (DXY) indicates the general international value of the dollar relative to a basket of major world currencies.


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Posted on Tuesday, July 19, 2022 @ 11:07 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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