December stock flows highest since April 2000

And passive once again clobbers active

Jan 19, 2017 @ 12:58 pm

By John Waggoner

Stock funds are back in fashion, but stock fund managers are about as popular as suits of armor.

Investors poured an estimated net $27.8 billion into U.S. stock funds in December, the most since April 2000, according to Morningstar Inc. Another $6.5 billion flowed into international funds.

December's flows are a reversal from most of 2016, when U.S. stock funds saw net outflows for the first 10 months of the year.

Active fund managers have no reason to celebrate, however: Investors yanked $23 billion from active funds while lavishing $50.8 billion on passive funds. Similarly, actively managed international funds saw $8.2 billion walk out the door and $14.7 billion flow to passively managed funds.

Things only look worse for actively managed funds for the full year. Index funds took in a record $504.8 billion last year, versus $418.5 billion in 2015. In 2016, investors pulled $340.1 billion from actively managed funds.

In a surprise development to no one, Vanguard saw the most inflows in 2016, with a net $277 billion in new cash. iShares came in second providers, with $140 billion, and SPDR State Street ran third at about $55 b billion in net new money. Fidelity's passive offerings were fourth, with $37 billion.

Among active fund providers, the American Funds saw a modest outflow of $4.9 billion, while Franklin Templeton saw $42.5 billion take a hike.

Investors also took a pass on alternative funds in December, selling a net $4.4 billion in 2016. The most popular fund categories last month:

Bank loan funds, with $5.8 billion in net new cash. The funds invest in variable-rate loans, which should be less susceptible to rising interest rates.

• High-yield bond funds, with $4.2 billion. A rising economy should boost the credit ratings of junk bonds, although rising rates will take some of the shine off of them.

• Foreign large-blend funds, with $2.8 billion. They have to perform better someday.

Investors treated large U.S. growth funds like an annoyed rattlesnake, dumping $11.2 billion in December and $101.9 billion for 2016, Morningstar said. Munis were also about as popular as a cobra: Investors pulled $5.5 billion from long-term national muni funds and another $3.7 billion from short-term munis.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Where in the U.S. are RIAs growing the fastest?

InvestmentNews' deputy editor Robert Hordt talks to senior columnist Jeff Benjamin about his report on how registered investment advisers are faring in different regions of the country.

Latest news & opinion

10 tips for hiring top young advisers

Hiring is not easy and retaining good employees can be even more difficult. Here's a roadmap for bringing on new advisers and training them — and even firing them, if necessary.

Wells Fargo Advisors 2019 comp plan sees little change

But lowest-producing advisers face a pinch in pay.

8 adviser fears for 2019

Interest rates, trade wars and bear markets, oh my! Looking across the industry, here are some of the biggest concerns heading into the new year.

3 big reasons to do a Roth conversion right now

The time is ripe for many to convert a pretax IRA to a Roth.

10 must-know facts about today's 401(k) plans

Here are the latest changes in 401(k) plans across areas such as investments, fees, contributions, investment advice and more.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print