US Equity Funds Hit Record Outflow

In June, active US equity funds went through the largest one month outflow since October of 2008. Morningstar released a summary of June 2016 asset flows, and it had some nervously wringing their hands.  

What’s going on?

We’re seeing a trend in recent months’ flow summaries of money moving from active funds to passive funds by the billions. In the month of June, only one active category group managed to record inflows: municipal bonds. Every other active category experienced major outflows, to the tune of $30B. Passive funds, on the other hand, are experiencing huge inflows, though the only passive category that did not record inflows this month was alternatives. Passive investing received an inflow of about $29.3B, which is almost as much as active investing lost.

Is it because of Brexit?

The international scene spent the entirety of the month of June with their eyes on Great Britain, waiting with bated breath for the vote that would decide the fate of their nation. On June 23, the citizens of Great Britain decided that they would no longer remain a member of the European Union. Though many feared the impact that this would have on the markets, it was not very substantial. Markets dropped in the direct aftermath of the vote but had shown significant recovery by the end of the month. Flows show that investors have withdrawn $13B from U.S. Equity and only $56M from International Equity in the same time span, so Brexit, it seems, cannot be blamed for the record outflows recorded in the month of June.

How do you attract new investors during times of huge outflow?

A PR campaign is a great way to attract new investors ESPECIALLY in times of huge outflows. A PR firm can help you stand out and attract investors while others flounder. By proactively telling your story to the media, you boost investor confidence by explaining how your fund’s strategy adapts to such market events. Reassuring investors they should ride out the storm increases retention and positions you as a thought leader among your peers.


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