Investors directing capital into mutual funds and exchange traded funds (ETFs) favored passive investing over active management on a massive scale for the 12-month period ended 12/31/20. This has been the case for the past several years.   

Passive mutual funds and ETFs reported estimated net inflows totaling $400.45 billion, compared to estimated net outflows totaling $188.03 billion for those actively managed.  

The largest amount of total net inflows (active and passive) in the period belonged to the Taxable Bond, Sector Equity and Municipal Bond categories at $441.40 billion, $56.32 billion and $55.36 billion, respectively. 

The only active category garnering more interest from investors than their passive counterpart via net inflows was Municipal Bond. 

In 2020, open-end mutual funds endured a record high $289 billion of outflows, compared to record high inflows totaling $502 billion for ETFs, according to Morningstar. 

Over the past three calendar years (2018-2020), passive mutual funds and ETFs reported combined estimated net inflows totaling $1.33 trillion, compared to combined estimated net outflows totaling $550.17 billion for actively managed funds, according to Morningstar. 

We intend to monitor net flows moving forward.