Flows jump after mutual fund-to-ETF conversions, BofA study shows

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Financial Times 12h ago

Flows jump after mutual fund-to-ETF conversions, BofA study shows - Financial Times

Quick Summary:

Woodard believed these “funds that had been doing well but haven’t been rewarded for it, in terms of investment flows,” were ripe for conversion.“As the market becomes more competitive, managers with assets under pressure may decide to convert while they still can,” he added.

In contrast, passive equity ETFs have sucked in net inflows of about $4.5tn over the same period as investors have increasingly embraced not just cheap index funds but also the ETF structure that brings with it greater transparency, liquidity and tax efficiency, as well as, in most cases, lower fees.

This “ETF advantage” was evident both for funds that beat their benchmark and those that failed to do so, with the average underperforming fund seeing inflows equivalent to 1.3 per cent of assets per month.