Fund Flows When The Market Bleeds

I have spent the past few days explaining to people why I do not bother picking stocks for the long term. I showed some statistics about fund manager’s performance and their fees (largely active, meaning they trade often, largely underperforming and largely overpriced). I would much rather go with ETFs (largely tied to the general performance of an index, largely cheap, because it is much easier to automate and manage). 

In my research, I found it interesting that about $1 billion a day has moved from mutual funds into ETFs, in 2021 in the US it’s been over to $300 billion, close to $3 billion a day (and we have not had 100 days yet). It is interesting that many people are picking stocks and often feel they can do it themselves and beat the mutual fund managers (and yes, some people can) but almost always, when there is a market sell-off, there is an acceleration of fund flows into ETFs (possibly more and more people realizing maybe there isn’t much of a point trying to beat the market).

The moral of the story? Always be skeptical about spin, look deeper. Right now, it seems everyone is a great stock picker and that’s ok, keep learning, keep educating yourself and may the markets remain in your favour (and remember, this can be true even when they’re falling). 

 What do you think about ETFs? Do you understand them, do you want to know more? Do you know you can pick an ETF just as easily as you can pick a stock in any provider? Let me know what you want to look into. 

ETF pick of the week –  SPDR S&P Retail ETF (XRT) – This is tracking the retail segment of the US. with a good low expense ratio of 0.35%, Year to Date (YTD) – 23.35%, 3m – 32.45%, 1Y – 99.79%

To know more about how I research ETFs and why I make these picks, you can shoot me a message I am often looking at ways to empower people to use amazing tools like your troveapp to do more for themselves, simplify things and make even more money by reducing the hit of fees. I’d love to hear from you. 

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