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September 12, 2016

Mutual Fund Investors Continue to Flock to Vanguard Group

by Pat Keon, CFA.

From the perspective of fund management companies the trends of 2015 have continued into 2016. Vanguard Group, which took in the most net new money last year (+$240.8 billion), continues to lead the pack this year, with net inflows of $168.4 billion so far. Another trend that has continued this year is investors putting money into offerings from Dimensional Fund Advisors LP (+$15.3 billion net) and Capital Research & Management Company (+$13.1 billion net). For the year to date the increases at DFA and Capital Research represent the third and fifth largest positive flows by fund management company, while they ranked fourth and second, respectively, last year. The two largest net outflows for 2015 belonged to PIMCO (-$102.8 billion) and Franklin Templeton (-$27.2 billion). These companies also account for the two largest negative net flows for 2016 year to date, but their order is reversed; Franklin Templeton and PIMCO have seen $24.5 billion and $15.5 billion leave, respectively.

The dominance by Vanguard is similar in both years. Last year no other fund management company came within $200 billion of their total net inflows, with the closest competitor being Capital Research at $23.3 billion. The gap this year is approximately $150 billion, with Goldman Sachs in a distant second place at $18.7 billion. For DFA the largest positive flows since the start of 2015 belong to two nondomestic equity funds: DFA International Core Equity Portfolio has taken in $4.1 billion of net new money, while DFA Emerging Markets Core Equity Portfolio has seen its coffers grow $3.0 billion. For Capital Research the net inflows in both years were driven by one fund, American Funds American Balanced Fund. This mixed-asset fund took in $10.5 billion of net new money during the period. PIMCO Total Return Fund accounted for the most significant net outflows in each year; it had $54.2 billion leave last year and $7.9 billion so far this year. For Franklin Templeton the Templeton Global Bond Fund and Franklin Income Fund accounted for the largest net outflows in each year. Overall, Templeton Global Bond Fund saw $20.2 billion leave, and Franklin Income Fund had a combined net outflow of $12.5 billion.


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