Analysis of 2015 investment returns shows actively managed mutual funds again took it on the chin, while the migration to passively managed exchange-traded funds continued unabated.
Only 27 percent of large-cap actively managed funds outperformed the Standard & Poor's 500 index, according to an end of year review by Goldman Sachs.
That lagged the 10-year average for actively managed funds, which beat the S&P index 36 percent of the time.
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The lackluster performance is likely to be fodder for proponents of passively managed investments, as some market watchers had predicted that overall equity market stagnation in 2015 would benefit actively managed funds' value proposition.
Other analysis comports with Goldman's data.
Morningstar says nearly 67 percent of actively managed large-cap growth funds fell short of their benchmark; nearly 88 percent of blended active mid-cap funds fell short their indices, according to research the firm provide for foxbusiness.com.
Meantime, ETFs attracted nearly $200 billion of new flows in 2015, according to data from Bank of America Merrill Lynch. Actively managed funds experienced $177 billion in outflows.
Bloomberg data shows ETFs took in $238 billion in 2015, close to their record inflows in 2014, which were $243 billion. The 2015 inflows were more than flows into index funds, active mutual funds and hedge funds, combined, says Bloomberg.
Today, Charles Schwab said it is adding two new providers and 14 new ETF options to its ETF OneSource platform, which gives investors access to commission-free purchases of EFTs.
The addition of the new funds from Deutsche Asset Management and John Hancock Investments means Schwab's ETF platform now offers 226 product options
As of September 30, 2015, Schwab's OneSource platform had $44 billion in assets under management and $9 billion in year-to-date flows.
While retail investors are generating the vast majority of ETF flows, some defined contribution providers hoping to prod more plan assets into the low-cost option.
In October 2015, Schwab Retirement Plan Services rolled out a new managed account option that RIA plan advisor specialists can use to build specialized savings strategies for plan participants.
In order to offset the higher cost for the managed account service, Steve Anderson, president of Schwab Retirement Plan Services, said the firm will offer advisors open investment architecture that includes ETFs, allowing RIAs to created managed options with cheaper passive investments that will come without commission costs to participants.
Schwab is betting that managed accounts that use ETFs will challenge target date funds' dominance as the most favored qualified default investment alternative for plan sponsors.
And Betterment is also structuring its robo-advisor managed account program on ETFs.
ETF.com says there were about 275 new exchange traded products launched in 2015.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
