by Jack Fischer.
Large-cap investors are ready to put 2022 behind them. The S&P 500 ended the year falling nearly 20%, marking its worst calendar year since 2008. Geopolitical concerns, persistent supply chain issues, ongoing inflation, and aggressive interest rate hikes by the central bank have significantly hurt the equity markets. The interest rate path we’ve been on paired with the forecast of an oncoming recession has battered the performance of growth stocks more so than their core and value counterparts, but each style has recorded recent outflows.
Performance-wise, Lipper Large-Cap Growth Funds were in the top three worst-performing Lipper U.S. Diversified Equity Funds (USDE) classifications over the following periods: November (-7.13%), Q4 (+2.75%), and 2022 (-31.51%).
Large-Cap Growth Funds have posted six outflows over the last seven weeks, putting them on pace for their fifth monthly outflow over the last six months. In November the classification saw inflows of $1.7 billion, marking its first monthly intake in five. Lipper Large-Cap Growth Funds have also witnessed 10 straight quarters of negative flows, so this appears to be more than just a little tax-loss harvesting.
Lipper Large-Cap Value Funds, on the other hand, finished in the top three best performing Lipper USDE classifications over the same periods: November (-4.14%), Q4 (+12.81%), and 2022 (-6.90%).
Flows into Large-Cap Value Funds have been mainly negative, with November 2022 (-$9.1 billion) being the worst monthly outflow on record. As of January 6, 2023, Large-Cap Value Funds are poised to record inflows in December, which would only be their second monthly inflow in the last 16 months.
Lipper S&P 500 Index Funds have not faired any better. Their performance lands in the middle of the pack, in between Lipper’s growth and value funds, but their flows are no different. This classification recorded its third-largest monthly intake in October (+$25.7 billion) but failed to see inflows during November (-$8.8 billion) and is on pace to observe another month of outflows in December.
Lipper S&P 500 Index Funds attracted $74.8 billion during 2021, which was their 12-month inflow record. Preliminary numbers suggest inflows of close to $54.5 billion for 2022, which doesn’t sound all bad, but the classification has been losing steam. Seven of the last nine weeks have been outflows, with S&P 500 Index Funds reporting three straight weeks of losing money.
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