According to Matthew Pickering, an analyst at Cerulli, in the aftermath of the 2008 financial crisis, investment managers have markedly increased passive investment options. “The volatile economy and emergence of ETFs [exchange-traded funds] have both been drivers in the steady increase in passive flows into mutual funds and ETFs,” Pickering said. “In fact, both are growing at a significantly higher rate than active mutual funds over the same period.”
In the Retail Products and Strategies 2012 report, Cerulli examines how managers feel about the shift toward passive investing and how this shift will change their product and distribution strategies.
“In an industry in which many of the world’s largest managers have built their brands using an active management strategy, offering passive investment products is likely to cause managers to make major organizational changes,” Pickering said.
“Active mutual funds still account for more than three-quarters of the industry as a whole, so investors are not completely shifting to passive investment options,” Pickering said. “However, passive mutual funds are currently positioned to have their highest inflows ever this year, quickly approaching their highest yearly total of $69 billion in 2007, so there is a strong shift.”
Many of the largest managers in the industry are finding value in providing advisers with both active and passive mutual funds and ETFs, and have constructed their distribution strategies in order to provide a wide array of investment options.
For more information and to purchase the report, visit http://www.cerulli.com/home.nsf/home/Home?OpenDocument.