LAKE SUCCESS, N.Y.,
July 31, 2017 /PRNewswire/
-- Advisors invested client assets in actively managed funds
in the first half of 2017, but net new flows were driven entirely
by low fee and institutional priced share classes, according to
data released today by Broadridge Financial Solutions, Inc.
(NYSE:BR) via its Fund Distribution Intelligence. In the first six
months of 2017, advisors from independent broker dealers and
wirehouse firms added net new assets of $150
billion and $40 billion,
respectively into institutionally priced actively managed
funds. The majority of these positive flows were the result of
conversions out of load funds (share class A, B and C), which
decreased by $122 billion and
$37 billion from independent and
wirehouse broker dealers, respectively.
"Actively managed funds saw positive flows during the first half
of 2017, even as advisors continue to invest client assets into
passively managed ETFs and index funds at an increased rate," said
Frank Polefrone, senior vice
president of Broadridge's data and analytics business. "Net new
asset flows into institutional shares of actively managed funds in
the first half of 2017 is further proof that price and performance
are the driving factors in advisor fund selection. We expect
to see the move to lower fee share classes continue throughout 2017
as the majority of advisors move to a fee based practice, and the
broker dealer home office realigns the mix of share classes offered
to meet both client demand and regulatory requirements related to
the DOL fiduciary rule."
Lower Fee Products Take Hold in 2017
Virtually all net
new assets in 2017 flowed to lower fee products – ETFs, index
funds, and institutionally priced actively managed funds.
- In the first half of 2017, net new asset growth increased by
$566 billion, or 5.5
percent.
- Almost 77 percent of fund and ETF net new assets, $433 billion, went into lower fee passive
products during the first half of 2017.
- Of the remaining $133 billion of
net new assets that flowed to actively managed products, all net
new assets went into lower fee institutional share
classes.
- The growth of lower fee products has been especially prominent
in distribution channels supporting fee based advice, such as the
RIA and online channels.
Net new assets into actively managed funds from all retail
channels – independent broker dealer, wirehouse, RIA and online
retail – were up $87 billion versus
$48 billion for passively managed
funds.
- The fastest growing channel on a percentage basis for the first
half of 2017 was the direct online channel, up 20
percent.
- Net new flows of mutual funds increased by $67 billion, or 22 percent, for the online
channel, with more than half of net new assets ($36 billion) going into actively managed
funds.
- Vanguard and Schwab drive the growth of the online channel,
offering a wide range of index and lower fee actively managed
funds.
"Today's advisors march to the drum beat of 'fees, fees, fees'
and fund manufacturers without a low-cost solution are, at best,
being ignored and at worst, getting trampled," Jeff Tjornehoj, Broadridge's director of
fiduciary and compliance research. "While equity mutual funds have
outflows of $69 billion collectively,
those with an expense ratio of just 20 basis points or less have
inflows of $93 billion. The battle
ahead is about how fund sponsors will accept a fraction of what
they historically collected. Even channels that traditionally
supported premium priced products, such as wirehouses and broker
dealers have shifted strategies based on fees."
In the first half of 2017, overall assets for ETFs increased by
11.6 percent to $3.1 trillion.
- The largest increase of ETF assets in the first half of 2017
occurred in the RIA channel, with net new assets of $78 billion, up 11.4 percent.
- The RIA channel remains the largest channel for ETFs with over
$800 billion invested in
ETFs.
Broadridge's Fund Distribution Intelligence comprises the most
complete sales and asset data collection in the industry, creating
transparency into more than $10
trillion of long-term mutual fund and ETF assets across a
majority of mutual fund distributors.
About Broadridge
Broadridge Financial Solutions, Inc.
(NYSE:BR) a global fintech leader, is the leading provider of
investor communications and technology-driven solutions for
broker-dealers, banks, mutual funds and corporate issuers globally.
Broadridge's investor communications, securities processing and
managed services solutions help clients reduce their capital
investments in operations infrastructure, allowing them to increase
their focus on core business activities. With over 50 years
of experience, Broadridge's infrastructure underpins proxy voting
services for over 90 percent of public companies and mutual funds
in North America, and processes
more than $5 trillion in fixed income
and equity trades per day. Broadridge employs approximately
10,000 full-time associates in 16 countries. For more information
about Broadridge, please visit www.broadridge.com.
Media Contact:
Joe LoBello
LoBello Communications
+1 516-902-2694
joe@lobellocommunications.com
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SOURCE Broadridge Financial Solutions, Inc.