Investors Favor Passive Over Active Despite Value Funds Comeback
Despite the strong inflows into stock and bond funds, U.S. investors also deposited large sums into money markets in March, a total $126.1 billion, or roughly four times the inflows in February.
They also strongly favored passive funds over active funds. Passive funds accounted for almost 90% of the $20 billion that large-cap U.S. value funds collected.
The preference for passive funds was also reflected in the data for fund families. Vanguard, and BlackRock’s iShares, which are best known for their passive funds, had the biggest fund inflows in March. Fidelity Investments and SPDR State Street Global Advisors followed.
Fund families known for their active strategies, like Dimensional Fund Advisors, T. Rowe Price and Franklin Templeton Investors saw net outflows in March. Both DFA and T. Rowe Price have recently entered the ETF market, which could potentially help boost inflows but that remains to be seen.
Ark Investment Management, which has only ETFs and most are actively managed, saw inflows of only $880 million March after collecting a “staggering $8 billion” in February, according to Morningstar.