Active Mutual Fund Investors Head For Exits To ETFs

According to one study, It appears that the actively managed mutual fund is out and other investment tools such as structured notes, 130/30 funds, separately managed accounts and exchange traded funds (ETFs) are in.

Financial Research Corp. studied the market and found that the market share is being divided up much differently than before, when mutual funds were in their heyday.

Cheaper alternative vehicles are increasingly the choice among financial advisors, as well. The Boston-based research study found that 70% of advisors surveyed think the actively managed mutual fund is still the best bet for international investing, and 50% think that they are the tool of choice for large-cap equity investing, reports Sue Asci for InvestmentNews.

However, the demand for traditional large-cap domestic equity may be fading out. From 1997-2007 this seemed to be the asset class of choice, nearly doubling its assets. But over the past three years the category is down to single digit-growth.

On the other hand, alternative investments such as long-short funds have grown 35% over the past decade. Asset allocation funds (such as target date funds) have had a compound annual growth rate of 28.7%.

Posted in Categories: Contributor, ETFs, External Research, Stocks.

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