The bigger deal here is the rotation out of growth and into value. A deeper look shows that the losses were confined to large-cap growth. Value took in assets across all size buckets.
Also noteworthy was the continued bleeding of low-volatility funds. The giants iShares Edge MSCI Min Vol USA ETF (USMV), PowerShares S&P 500 Low Volatility Portfolio (SPLV), iShares Edge MSCI Min Vol EAFE ETF (EFAV) and iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV) lost over $867 million. Once again, targeted small and midcap low-volatility funds went counter to trend, drawing in $175 million.
In all, 2017’s first month fund flows were largely in line with 2016’s, with vanilla funds edging out strategic and idiosyncratic ones. Active management continued to outpace, but often in areas where there is not yet a passive option.
Who knows? Maybe this spells opportunity for any issuer brave enough to launch a well-crafted passive option in the ETF segments with only active management. Believe it or not, there are 29 such segments, with $16.1 billion in combined assets.
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