This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes mutual fund and exchange-traded fund (ETF) product trends as of October 2022, covers the rise of mutual funds after months of asset declines, and examines environmental, social, and governance (ESG)-focused registered product launches.

Highlights from this research:  

• October proved to be a strong month for the ETF vehicle, which experienced 7.1% asset growth to more than $6.3 trillion. Net flows played a key role in asset growth, with investors adding a total of $86.7 billion across passive ($81.2 billion) and index ($5.4 billion).

• After two consecutive months of asset declines, mutual funds reversed course in October and posted 3.9% growth, ending the month at $16.2 trillion. Headwinds faced by mutual funds include fixed-income market declines and outflows of $110.6 billion. Alternatives make up just 1% of mutual fund assets at $179.6 billion but have the most net flows ($23.1 billion) of any asset class thus far during 2022.

• ESG-focused registered product launches continued their upward trajectory trend that began in 2014, with a record-breaking 137 products launched or rebranded in 2021. Product development of ETFs surpassed mutual funds in 2021 and the first half of 2022, motivated by demand for lower-cost and passive investment options. New product launches cover more targeted themes, such as climate change and social justice, broader asset classes, and expand across market cap and style.