In recent years, we can observe a significant shift towards passive funds in the investment world and at the same time a shift away from active funds. This trend also continued last year.
According to data from Morningstar, in particular companies with a strong focus on passive fund management have been able to attract new capital. The world's largest asset manager, US company BlackRock, which manages ETF funds under the iShares brand, raised $ 259 billion in new net capital (inflows minus outflows) last year. In second place was the US investment company Vanguard, which also focuses, almost exclusively, on passive funds. As a result, Vanguard earned a total of $ 108 billion last year. It should be added that these two investment companies are also the two largest investment companies in the world. Thus, another trend continues, with the largest asset managers obtaining the largest amount of new additional capital from investors.
On the contrary, the worst performing companies were investment companies that focus primarily on the management of active funds. The US company Franklin Templeton, which lost $ 48 billion, did the worst last year.
At the same time, it is very likely that this trend of capital transfer from active to passive funds will continue in the coming years, as passive funds are generally significantly cheaper, i.e. they have significantly lower management fees. And it is this attribute that is increasingly focused on by large institutional funds in particular today.
Investment Strategist at Conseq Investment Management, a.s.