Passive funds continued to gain market share last year, yet their news wasn't all good.

Eric Balchunas Bloomberg Senior ETF Analyst, Funds Product Specialist

Net inflows into passive mutual funds and ETFs reached $395 billion for the first 11 months of 2018, even as fund investors pulled $150 billion in net outflows out of active funds (not counting money market funds), Bloomberg reports, citing Morningstar data. Yet that put passive funds on pace to end 2018 well behind the nearly $700 billion (a record) in inflows they netted in 2017. In other words, the great passive boom is slowing down. (Stay tuned for more detailed flows data later this month.)

That trend holds for two asset management titans that have been the biggest winners of the passive boom, who both saw their net inflows on track to roughly be cut in half. Vanguard brought in $168 billion in net inflows for the first 11 months of 2018, Bloomberg notes, compared to the $329 billion it brought in for all of 2017. And BlackRock brought in $108 billion in passive inflows in the first 11 months of 2018, down from $213 billion for all of 2017.

Bloomberg also includes some other flows tidbits, including details about two other titans as well as a prediction that, in 2019, assets in passive U.S. equity mutual funds and ETFs will surpass those in active U.S. equity funds. And Eric Balchunas, senior ETF analyst and funds product specialist at Bloomberg, noted that "you tend to see passive gain market share share in difficult environments," while active fund investors panic. 

Edited by: Neil Anderson, Managing Editor


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