Passive vs. Active Fund Flows
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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 6/30/20.    
  2. Passive mutual funds and ETFs reported estimated net inflows totaling $394.46 billion, compared to estimated net outflows totaling $313.83 billion for those actively managed.  
  3. The largest amount of total net inflows in the period belonged to the Taxable Bond, Municipal Bond and Commodities categories at $257.68 billion, $51.73 billion and $35.82 billion, respectively. 
  4. The only active category garnering more interest from investors than their passive counterpart via net inflows was Municipal Bond. 
  5. Taxable Bond funds took in a net $92 billion in June 2020. That is an all-time high for a single month. The spike in flows was due in part to the Federal Reserve ramping up its purchases of corporate bond ETFs, according to Morningstar. 
  6. We intend to monitor net flows moving forward. 
This chart is for illustrative purposes only and not indicative of any actual investment. 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.  

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Posted on Thursday, July 16, 2020 @ 1:41 PM

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.