ICI | 9/29/2021
Because… According to ICI, U.S. retirement assets of $37.2 trillion increased 19.4% from a year ago. IRAs experienced the fastest asset growth, with a 12-month growth rate of 24.4%, compared to DC plans’ 19.8% increase. Both long-term mutual funds and money market funds in retirement accounts experienced outflows in 1H21, with $54 billion taken out of long-term funds and $37 billion pulled out of money market funds. In comparison, investors withdrew $179 billion from long-term funds and deposited $103 billion in money market funds in 1H20. Among long-term funds, bond funds brought in $82 billion in 1H21, whereas equity funds and hybrid funds parted with $119 billion and $18 billion, respectively. Investors took $107 billion out of equity funds in DC accounts and $11 billion from IRAs. Meanwhile, they added $25 billion to bond funds in DC accounts and $57 billion to IRAs.
Business Wire | 9/30/2021
Because… Besides Franklin Templeton’s acquisition of O’Shaughnessy Asset Management, a custom indexing platform provider, Vanguard just completed the acquisition of Just Invest, which also offers a direct indexing platform. Schwab is reportedly piloting a direct indexing separately managed account (SMA), with expected availability to advisors and investors in 2022. Smartleaf Asset Management announced yesterday that it will provide advisors with easy access to customized, tax-managed direct index portfolios based on Morningstar Indexes. These all point to the industry’s increasing focus on direct indexing. Direct indexing provides the flexibility and customization that mutual funds and ETFs cannot offer. Although it may not pose an immediate threat to the fund industry, it should be very appealing to the investor community and take assets away from existing investment vehicles. Currently, the cost for direct indexing is estimated to be close to 0.30% to 0.40%, compared to the average fee of 0.13% for passive funds. With large financial firms competing for business and committed to bringing it downstream, we expect the fees to come down in the near future.
SEC Filings | 10/4/2021
Because… While the filing of two actively managed ETFs marks DoubleLine’s official entry into the ETF space, the firm is no stranger to ETFs. It started sub-advising AdvisorShares DoubleLine Value Equity ETF a decade ago. DoubleLine has also been managing three SSGA ETFs since 2015: the $97.5 million Emerging Markets Fixed Income ETF, the $193.2 million Short Duration Total Return Tactical ETF, and the $3.1 billion Total Return Tactical ETF. DoubleLine had $84.7 billion of mutual fund assets in the retail market as of the end of August, with $10.3 billion in U.S. Equity and $74.0 billion in Taxable Bond. The firm was hit by net redemptions of $10.7 billion in 2020, with $9.5 billion out of its Taxable Bond mutual funds. Investor withdrawals slowed substantially to $1.3 billion this year through August. In particular, flows out of its flagship Total Return Bond Fund reduced to $2.3 billion this year from $5.4 billion in 2020. Its only U.S. Equity offering, Shiller Enhanced CAPE Fund, also saw its outflows decrease to $34 million from $993 million last year.