Advisor Blog
American Funds: $81.5B Outflow in 2011
According to a January 16 article in Investment News, investors withdrew a net $81.5 billion from American Funds in 2011, including a net outflow of more than $33 billion for the company's flagship product, Growth Fund of America. No other mutual fund even came close to matching that amount of outflow. In fact, there was not an entire fund family that matched the outflow of just this fund. Fidelity Investments came closest with outflows of $28 billion. According to Morningstar, Inc. analyst Kevin McDevitt, Growth Fund of America ranked in the bottom 25th percentile of all large-cap growth funds for 2011.
A few years ago, we heard a lot about American Funds and it seemed that almost every brokerage firm was pushing them. I remember going to a local Chamber of Commerce meeting where there were three representatives from different local offices of the same brokerage firm - all singing the praises of American Funds.
In 2011, investors showed a strong shift away from actively managed funds. As a result, the Vanguard Group took in $29.5 billion in mutual fund inflows, the most of any mutual fund family. Could it be that a larger group of individual investors has finally caught on to the fact that active management is an expensive failed strategy?
Comments
I certainly think that could be a factor. More plan sponsors are realizing that low-cost passive investment options should be made available to participants.
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Could it also be that more companies are moving their 401k plans away from actively managed funds?