Liquid Alternatives Achieve Positive Net Flows Despite Overall Mutual Fund Outflows
October 31, 2022 — Boston
This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes trends in asset class flows as of September 2022, including extensive coverage of mutual funds.
Highlights from this research:
- Mutual fund assets plummeted 8.1% during September, falling to $15.6 trillion. Since year-end 2021, the vehicle has witnessed a nearly 25% drop in assets. Total mutual fund outflows summed to $102.8 billion in September, bringing the YTD total to more than -$600 billion. However, alternative mutual funds racked up another month of positive net flows, adding $261 million in September.
- The exchange-traded fund (ETF) industry witnessed total assets slip below $6.0 trillion in September, ending the third quarter at $5.9 trillion. Total assets are down 18.1% since year-end 2021. Despite the declining asset figures, optimism surrounding the vehicle remains, as investors have poured in net flows of more than $400 billion during the first nine months of the year.
- The mutual fund remains the largest investment vehicle by assets and breadth of use across U.S. institutional and retail client segments. Product development focus has shifted away from the mutual fund as investor demand is shifting elsewhere in search of lower cost and customization potential. However, the size and breadth of use of the mutual fund means that managers should place a heavy emphasis on mutual fund product management. Product management functions have been focused on myriad activities, notably spending significant chunks of time on supporting/training sales teams, product positioning, and enhancements and changes to existing products. Share class optimization and ensuring competitive fees are other key areas on which product management functions should be focused.
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