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Mutual Funds Gaining Back Share From ETFs?

April 9th, 2012

Instead, in the last two months, flows into equity exchange-traded funds (ETFs) have slowed, while flows into equity mutual funds have picked up. Just last December, the spread between the two was a whopping $46 billion in favor of ETFs; by March the advantage had shrunk to $5 billion, and equity mutual funds were seeing positive inflows for the first time since last April.

So what’s going on? One reason for the turnaround: In a volatile world, many investors prefer having an active manager shifting holdings and sidestepping the carnage in a particular sector or region. “Mutual funds are more nimble in navigating the investing landscape,” said Loren Fox, senior analyst for fund research firm Strategic Insight. “If you’re locked into a tight box with an ETF, and your box is going down the tubes, then low costs aren’t your first concern. It’s the fact that you’re losing a lot of money.”

See the full Reuters story: HERE



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