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-Mutual funds lost $70.6 billion in assets due to capital flows in December, but assets still increased by $670 billion in the month due to strong market performance. Of the $74.7 billion in outflows from actively managed mutual funds that month, passively managed mutual funds offset only $4.1 billion.
-ETF total assets increased by 24.5% in 2023 after increasing by 10.6% in the second half. ETF assets increased by $439 billion in December, with $128 billion of that coming from net inflows. Passively managed ETF flows exceeded actively managed ETF flows by $100 billion, but active managers had higher internal growth rates of 2.9% vs. 1.6%, respectively.
-Various asset management companies are considering launching active ETFs. While this is a natural step for many managers, the use of active exposure within ETF structures, known for offering low-cost exposure that advisors build themselves, is still in its infancy. Management needs to offer differentiated active products at lower costs.
-Alternative investment managers face a more challenging sales environment as fixed income exposures are able to meet return targets and provide downside protection.
-Cerulli recommends focusing on the practice management benefits of using alternative investments when speaking with clients. Money market funds hold a record $6 trillion and continue to accumulate assets, so as long as higher interest rates exist, Cerulli believes the exposure will be attractive to advisors.
Source: Cerulli
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