ETF Investors Bailed on Active Funds for Cheaper Passive Alternatives

Investors in exchange-traded funds (ETF) and mutual funds have fled well-known active investment houses this year in favor of cheaper passive products, the Financial Times reported.

A person drawing a line graph with the phrase "ETF" in large letters on a chalkboard
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Vanguard had net inflows of $67.7 billion, while State Street Global Advisors, attracted more than $20 billion. Passive funds track an index of shares, rather than taking active bets on which securities will outperform.

Demand for State Street SPDR Gold Shares (NYSEArca:GLD) ETF accounted for the majority of its inflows.

Large managers such as Invesco, Franklin Templeton, Pimco, T Rowe Price and Capital suffered net redemptions of between $17.9 billion and $32.2 billion in H1 2020.

BlackRock (NYSE:BLK) in contrast saw inflows of around $74 billion across its funds, with its iShares ETF arm accounting most of the share of sales.

While passive funds pilfered market share from actively managed mutual fund rivals, the latter camp is still home to some investment ideas, InvestorPlace contributor Todd Shriber wrote last week.

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