Investors Favor Passive ETFs, MFs, As Active Underperforms – ValueWalk Premium
Active Vs Passive Etfs

Investors Favor Passive ETFs, MFs, As Active Underperforms

Thanks to weak results clocked by actively managed funds, domestic equity purchases have favored ETFs and indexed mutual funds, Goldman Sachs research points out.

Analyzing 684 mutual funds with $1.7 trillion of asset under management, Amanda Sneider and team at Goldman Sachs in their research report dated May 20, 2014 point out both equity and bond funds witnessed net inflows.
Active vs passive
The Goldman Sachs analysts point out that domestic equity fund purchases have favored ETFs and indexed mutual funds over actively managed funds. They note actively managed domestic equity funds reported $1 billion of outflows during the first quarter against $20 billion of inflows witnessed in index funds and $1 billion in ETFs. This trend has been captured in the following graph:

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