ETF-Savings/Investment Plan (2007-Nov. 2016)
Vanguard's market share keeps growing. Only Vanguard and Dimensional Fund Advisors saw net inflows in November 2016. The Vanguard Group now has one in every five dollars in the USD 16 trillion mutual fund industry, according to Morningstar.
Vanguard, which has nearly USD 3 trillion in U.S. mutual fund assets, is riding the wave of passive investing, which shows no sign of cresting. Overall, passively managed U.S. stock funds saw an estimated net inflow of USD 9.6 billion in November, versus a net outflow of USD 67.5 billion from actively managed funds.
Of the 10 largest fund companies by assets, only Vanguard and Dimensional Fund Advisors (DFA) had net inflows (DFA saw an estimated USD 1.4 million in new money come in the door). Fidelity, for example, saw nearly USD 9 billion leave the complex, despite USD 3 billion inflow to its index offerings.
Investors did just the opposite of what they should have done in November, selling funds that invest in the U.S. stock market and buying international funds. The U.S. stock market has surged since the election, while a strong dollar and weak foreign markets have hurt international funds. Investors sold a net USD 16.1 billion from U.S. stock funds in November, with USD 11.3 billion leaving large-company U.S. growth funds. Foreign large-company blend funds saw USD 4.5 billion in net new money.
Bond funds also saw an exodus as rising interest rates started taking a toll on their share prices. Morningstar estimates that USD 6.8 billion left taxable bond funds and another USD 10.2 billion fled municipal bond funds.
But not all bond categories were spurned. U.S. inflation-adjusted bond funds saw a net inflow of $1.1 billion, presumably because investors think a more rapidly growing economy will push up the cost of living.