Vanguard is attracting a lot less money from investors this year compared with 2017. Turns out, the mutual fund giant’s not alone.
Passive funds are the decisive victor in attracting cash.
The money manager collected $138 billion in the first half of 2018, down from $237 billion in the same period a year ago, according to the firm. That’s a decline of 42%. By comparison, total U.S. fund flows — money going into exchange-traded, active and passive mutual funds — fell roughly 50%, according to Bloomberg estimates.
“At first glance it looks like Vanguard is having an off-year, but relatively speaking their dominance is still intact,” said Eric Balchunas, senior ETF analyst with Bloomberg Intelligence.
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The firm anticipates the change will save its 1.5 million Admiral Shares clients roughly $71 million.
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Treasury yields have fallen in response to tariffs imposed by the Trump administration, making defensive sector holdings more attractive.
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The reason for the drop-off in overall flows? The so-so performance of the stock market, said Balchunas, who points out that there is a strong correlation between market returns and fund flows.
The S&P 500 rose 2.7% in this year’s first half compared with 9.3% in the first six months of last year.