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Tuesday, October 16, 2012

ETFs Are Stealing Mutual Funds' Lunch

News summary by MFWire's editors

Morgan Stanley analysts report that investors are flocking towards ETFs at the expense of more expensive mutual funds.

According to ETF Trends, the recent note by Morgan Stanley analysts report that "ETFs have taken 57 percent of total mutual fund flows into US long-term asset YTD, and we expect further penetration in fixed income and international markets."

Analysts added that they "also think ETFs will be the first to see any cyclical pick-up in flows, though pricing pressure could squeeze out all but the truly scaled firms or those with a product edge."

Larger ETF providers such as Vanguard [profile], BlackRock [profile] and Charles Schwab [profile] are taking steps to cut ETF costs as the fee war escalates. Global ETF growth has compounded at about 25% after the financial crisis, according to Morgan Stanley. At roughly 6% of global mutual funds the analysts see “significant further growth potential” for the ETF business.

To read more about this asset management rout, go to the full story on the ETFTrends website

Edited by: HFD

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