The revolution in how mutual funds are distributed has been felt on the ground for two years, and now that shift is being seen in the numbers. Shareholders are net sellers of retail equity shares, but that does not mean they are selling everthing. Indeed, they are net buyers of institutional share classes of equity funds in a move that is somewhat offsetting the redemptions, reports the Wall Street Journal Fund Track column
Since 2009 that shift in buying habits is dramatic. Shareholders redeemed $162 billion from retail shares (think A-, B-, and C-shares) and another $55 billion from no-load funds. Meanwhile, insitutional share classes saw inflows of $72 billion. The numbers in the article came from Morningstar
Insitutional shares are taking off due to their inclusion in 401(k) plans and their use in wrap accounts and broker-dealers at by fee-based financial advisors.
The shift jibes with the day-to-day reports from wholesalers and sales executives in the industry who are increasingly focused on fee-based advisors and the defined contribution investment-only channels.
Industry insiders have pointed to those two channels as areas of growth since the financial meltdown in 2008, now they may have some of the numbers they need to back up their instincts.
Sean Hanna, Editor in Chief
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