Equity mutual funds and ETFs celebrated their fifth quarterly gain in six—with the average equity fund (+6.92%) posting its second straight quarterly plus-side return. LSEG Lipper’s U.S. Diversified Equity Funds (+9.07%) outpaced the other seven equity and mixed-assets macro-classifications for the first quarter since Q2 2023. Q1 2024 had actively managed equity funds (+7.09%) outperform their passive (+5.95%) counterparts by 114 basis points (bps), marking the fourth largest quarterly outperformance by active management since the start of 2013. In this segment, I provide a market recap plus highlight the quarterly and monthly performance results for conventional equity mutual funds

Fixed income funds realized a return of positive 6.06% on average during the fourth quarter of 2023, marking a rebound from their third quarter loss (-1.70%). Fixed income funds have now reported four quarterly gains in the last five. Tax-exempt bond funds (+6.79%) outperformed taxable bond funds (+5.81%) for the first time all year as they recorded their second largest quarterly return on record, trailing only Q3 2009 (+7.73%). Despite the nearly 100 basis point (bps) outperformance, taxable bond funds returned their highest quarterly return since Q2 2020. Summary: All 51 Lipper fixed income classifications ended the fourth quarter with

The Lipper Large-Cap Growth Funds classification encompasses funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) above Lipper’s U.S. Diversified Equity Funds large-cap floor. Large-cap growth funds typically have above-average characteristics compared to the S&P 500 Index. The Lipper Leaders Rating System is a toolkit that helps guide investors and their advisors in selecting funds that suit individual investment styles and goals. According to LSEG Lipper, “Each fund is ranked against its peers based on the metric used (such as its flagship risk-adjusted return measure, Consistent

Headline figures £879.8bn Value of all ETFs listed on the LSE, as of June 2023.   £3.36bn June flows for the best-selling classification, Equity Global.   4.63% Proportion of ETF flows accounted for by active vehicles, despite being only 1.3% of ETF net assets.   £8.3bn Total estimated net flows for June.   £9.98bn Average turnover of ETFs on the LSE in June—or 11.9% of total turnover.   £5.04bn Net ETF flows going to BlackRock in June.   Assets Under Management[1] Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type as of June 30, 2023

Examining the origins, evolution, and defining innovations leading to the global growth of mutual fund investing   Origins of Western Mutual Fund Investing The mutual fund has democratized investing by enabling access to professional management and the benefits of scaled asset allocation and diversity for investors across the income spectrum. Early origins likely hailed from collective investment trusts first promulgated by the Dutch in the mid-eighteenth century. Perhaps the inspiration for this novel investing approach sprang from another pioneering event from the Dutch: the first investing bubble—known as the famous tulip bulb “mania”—of the 1630s. This event saw everyday people

The global economy remains resilient and the tightening of monetary policy by most central banks could start to bear fruit, while inflation begins to move towards target levels. But what does this mean for equities and bonds? Read our Mid-year investment outlook as we explore the challenges and opportunities dominating markets. Key takeaways: The 60/40 portfolio: Following the unusual correlation of equities and bonds in 2022, is the 60/40 portfolio a strategy that is still fit for purpose? Value versus growth investing: Are both strategies just as popular as each other for identifying stocks with the potential for strong returns while minimising

Using the Lipper Leaders scoring system to analyse the best performing funds in the IA Global Equity Income sector.   We last looked at Global Equity Income exactly a year ago when we noted its advantages in a rising rate environment, especially when compared to “conventional” global equities. And, it must be said, compared to UK income payers, which we covered last month. Then we noted that if we were in a period where base rates were due to remain higher than over the previous two decades, then dividend paying stocks were more likely to outperform. Given that UK investors

The Lipper Small-Cap Core Funds classification is defined as funds that by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) below Lipper’s USDE small-cap ceiling, according to Lipper methodology. These funds have more latitude in the companies in which they invest. These funds typically have average characteristics compared to the S&P SmallCap 600 Index. The Lipper Leaders Rating System is a toolkit that helps guide investors and their advisors in selecting funds that suit individual investment styles and goals. According to Refinitiv Lipper, “Each fund is ranked against

Asset Class: Long-term sustainable funds attracted £4.11bn in Q1 2023, £3.81bn to equity funds, as their conventional peers took in £2.58bn. Classification: Equity Global funds were the most popular sustainable classification, netting £2.34bn, followed by US and emerging market equity. Active v Passive: Sustainable funds took more than half of passive fixed income flows despite comprising only about 10% of the market by AUM. Fund manager: BlackRock saw inflows of £3.5bn, of which £3.02bn was in equity funds.   ESG v Conventional Flows by Asset Class Chart 1: Asset Class Flows, ESG v Conventional, Q1 2023 (£bn) Source: Refinitiv Lipper

While money market funds saw the largest inflows, this was equalled by the combined flows to risk assets. Asset Class View Money market funds saw the greatest inflows (£3.4bn), the first time this asset class has been in positive territory since the surge last October. Equity funds took almost £2bn—the first time in the black this year. Active v Passive Long-term active funds took £745m, while their passive equivalents netted £2.7bn. ETFs attracted £651m, largely to fixed income, while passive mutual funds saw inflows of £2.7bn, mainly equity. Classifications The top money-taking classifications in March were Money Market GBP (£3.4bn),

Using the Lipper Leaders scoring system to analyse the best-performing funds in the IA UK Equity Income sector. Dividends are important again, even if investors have yet to be convinced of the importance of the UK equity market as a source for this, despite it paying a higher dividend as a percentage than other stock markets. That’s perhaps understandable, as Global Equity Income has delivered a greater total return over one, three, five, 10, and even 20 years when compared to its domestic peer, even with a lower dividend. Some £2.6bn has been withdrawn from the UK Equity Income sector

I’ve been reading a lot of reports that this is going to be a good period for active fund managers. Many of these reports, you may be surprised to learn, come from active fund managers themselves. Intuitively, you would expect a widening dispersal of security returns to be reflected in a wider range of fund returns for the same period, and research does indeed back this up. That doesn’t necessarily work in favour of active management per se, however. Nevertheless, my innate cynicism aside, volatility can be the stock picker’s friend. Dispersal of returns is supposed to be fertile ground