403(b) Curriculum Library

Chart of the Month: Record Flows Into Passive Investments

Source: Morningstar, PIMCO

Since the global financial crisis, there has been a significant shift in flows from actively managed funds into passively managed strategies. While the trend has impacted all asset classes, the fund flows have been most pronounced in the U.S. equity markets. According to Morningstar, passive funds made up just 20% of U.S. equity assets at the start of 2007. Today, they account for almost 45% of all U.S. mutual funds and exchange-traded products. While investors' preference for low-cost passive funds will likely persist, volatile markets and concerns about a potential correction may begin to slow this trend. With volatility expected to persist in 2019, and the economic cycle shifting, the environment for active management is starting to look more favorable than it has in a decade.

Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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