Firms Taper Mutual Fund Lineups; Active Funds Show Signs of Survival
Citing data from the Investment Company Institute, the Financial Times reports that asset managers are drastically shrinking their mutual fund lineups while ETFs continue to gain share. The FT reports that 644 mutual funds were shut or merged in 2020, the highest figure since 2009, while only 268 funds were launched. Meanwhile, the number of new ETFs rose to a record 313 in 2021 although there were also a record 182 ETF liquidations last year. Separately, a recent post by Morningstar notes that actively managed funds held their own during the volatility of 2020. According to Ben Johnson, Morningstar’s director of global ETF research, “at year's end, just shy of half, so 49%, of the 3,500 or so actively managed funds that we include in our analysis, managed to both survive and outperform the average of their passive peers during the 2020 calendar year.” Johnson discusses active/passive fund performance in a recent article, and Morningstar’s latest Active/Passive Barometer report provides additional data. Johnson says that the pandemic market selloff and rebound “tested the narrative that active funds are generally better able to navigate market volatility than their index peers.” The fact that just 49% of the analyzed funds survived and outperformed their average passive counterpart was not much of a change from Morningstar’s midyear report, in which 51% of active funds both survived and outperformed their average index peer during the first half of the year, Johnson notes.