## [# Hougan: Death Of Mutual Funds Accelerates](/sections/etfcom-analysis/hougan-death-mutual-funds-accelerates)
# Hougan: Death Of Mutual Funds Accelerates
New data from Charles Schwab show that the death of mutual funds is happening faster than we thought.
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[By Matt Hougan](/contributors/matt-hougan)
Aug 14, 2015
Edited by: Matt Hougan
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One of the many things I love about Charles Schwab is that, as a publicly traded firm, it provides an amazing window into market trends.
The company is large enough and covers enough of the market—both retail investors and advisors—that it can serve as a legitimate proxy for the market as a whole.
**Doozy Data**
Schwab just filed its new [Monthly Activity Highlight](https://pressroom.aboutschwab.com/press-release/corporate-and-financial-news/schwab-reports-monthly-activity-highlights-58) and the data are a doozy. While Schwab doesn't comment on it in the release, a close look at the data shows unequivocally: *The mutual fund is dead and the ETF is ascendant*.
Look at net inflows by Schwab customers into mutual funds and ETFs by month over the past year. (These numbers are all in millions of dollars.)
AugSeptOctNovDecJanFebMarAprMayJuneJulyTOTAL**Mutual
Funds**612-4,022358254-4,3813,1743,0861,765420813-725-1,105253**ETFs**1,5141,2532,8273,3654,1273,5563,2903,7952,9931,8302,4181,79832,766Charles Schwab is a firm that leads the market in no-load mutual funds. It earned $839 million last year from its lucrative Mutual Fund OneSource program. And yet, ETFs outpolled mutual funds for net inflows 130-to-1 last year among its customers.
We have seen this story before. Over the past six years, ETFs have pulled in more than $1 trillion in net inflows while mutual funds haven't managed to attract $200 million. But going 130-for-1 over a 12-month period at Charles Schwab is extraordinary.
**Really A Passive Story**
Part of this is an active versus passive story, more so than an ETF versus mutual fund story. [According to Morningstar](https://corporate.morningstar.com/us/documents/pr/AssetFlowsAug2015.pdf), passively managed funds (including ETFs) pulled in $484 billion in net new money over the past year, while actively managed funds (almost exclusively mutual funds) lost $97 billion in flows. But ETFs are becoming the vehicle of choice for passive investors, and as I see it, the Morningstar data largely validate Schwab's information.
In other highlights from the past year, ETFs have:
- [Surpassed hedge funds on an AUM basis globally](https://www.valuewalk.com/2015/07/global-etfsetps-assets-surpassed-global-hedge-funds-assets-in-2q15/)
- [Topped mutual funds](https://www.marketwatch.com/story/etfs-outgrew-mutual-funds-in-retail-channels-for-the-first-time-in-q1-according-to-broadridge-2015-05-04) as the [product of choice](https://www.post-gazette.com/business/money/2015/06/11/ETFs-top-mutual-funds-in-popularity/stories/201506090033) by financial advisors for the first time
- [Gained significant traction from institutional investors](https://www.pionline.com/article/20150126/ONLINE/150129911/institutional-investors-to-drive-etf-asset-growth-8212-2-reports)
A year and a half ago, FactSet's vice president of ETFs, Dave Nadig, and I predicted that [ETF assets would surpass mutual funds within 10 years](https://www.etf.com/sections/features/21150-the-future-of-etfs-huge-growth.html). So far, assets have tracked our prediction with amazing fidelity.
But with more and more data like this coming out, I'm starting to wonder if Dave and I weren't a little bit conservative in our prediction.
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*Contact Matt Hougan at* [*mhougan@etf.com*](mailto:mhougan@etf.com)*.*
[ Matt Hougan ](/contributors/matt-hougan)
Matt Hougan is CEO of Inside ETFs, a division of Informa PLC. He spearheads the world's largest ETF conferences and webinars. Hougan is a three-time… [View Bio](/contributors/matt-hougan)
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