Investment Trends

Institutional Investors Expect To Increase Allocations To Active Strategies

A noteworthy amount indicate increasing allocations to active strategies in equities and fixed income

A new report from Cerulli Associates evaluates AUM flows and trends for mutual funds, exchange-traded funds (ETFs), money market funds, and new products. Access the full report here.

March 1, 2023, BOSTON—This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes mutual fund and exchange-traded fund (ETF) product trends as of January 2023 with a special focus on institutional investors’ expected allocations to active strategies.

Highlights from this research:

Mutual funds closed 2022 on a sour note, with assets having dropped 4.5% in December. Reversing course, asset growth was favorable to start 2023, with the vehicle’s assets climbing 5.8% to $17.2 trillion. While mutual funds are in overall outflows (-$1.9 billion), some asset classes have gathered positive net flows to start 2023. Taxable bond mutual funds, which suffered more than $380 billion in outflows during 2022, managed to add more than $15 billion during January 2023. Similarly, municipal bond mutual funds added $7.7 billion during the month, bucking the 2022 trend in which outflows amounted to $148.7 billion.

After climbing 6.6% during January 2023, ETF assets stand poised to surpass the $7.0 trillion barrier, ending the month at $6.9 trillion. Net flows during January continue to be steady, coming in at $44.3 billion, slightly below the $52.6 billion monthly average for the preceding five months. Despite representing 17.7% of total ETF assets, taxable bond flows accounted for 28% ($22.6 billion) of all ETF flows in January 2023. The success can be largely attributed to Treasury bond ETFs.

The gap between active and passively managed funds hit new lows in December 2022; however, according to a Cerulli survey, most institutional investors still want a majority of their portfolios to be actively managed. A noteworthy number of institutional investors indicate increasing their allocations to active strategies in equities (28%) and fixed income (20%). Of those institutional investors that indicate an expansion in the use of active equity strategies, nearly one-third (32%) expect to increase their allocations to U.S. equity.




About Cerulli Associates
For over 30 years, Cerulli has provided global asset and wealth management firms with unmatched, actionable insights.
Headquartered in Boston with fully staffed offices in London and Singapore, Cerulli Associates is a global research and consulting firm that provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.


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