While passively managed funds are all the rage, the bulk of the money investors put into them still goes to the top two giants — because most fund firms simply can’t compete with them on price, InvestmentNews writes.
Dominating the Passive Market
Vanguard’s passive funds took in $337.6 billion in net inflows over the past 12 months, or more than half of the $671.1 billion that went into passively managed funds during that time, according to Morningstar estimates cited by the publication. And iShares’ passive fund inflows accounted for more than half of what remained, or $191.5 billion, according to Morningstar. Most other fund providers lack the economies of scale to match the two firms’ low expenses, which are normally less than 0.1%, InvestmentNews writes.
The ETF industry continues its obsession with smart beta funds, meanwhile, according to the publication. The 650 strategic beta exchange-traded products now hold $621.9 billion, or about a third of all exchange-traded products, InvestmentNews writes citing Morningstar. Smart beta funds also made up about 40% of all new launches in exchange-traded products over the past three years, according to Morningstar.
The bulk of the money invested in strategic beta also goes to well-recognized providers, InvestmentNews writes. Unsurprisingly, Vanguard Value ETF (VTV) was among those that lured the most assets in recent months, getting estimated net inflows of $3.8 billion this year, according to the publication.
