Stockpicking funds suffer record $450bn of outflows

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Investors have pulled a historic $450bn out of actively managed stock funds this year, eclipsing last year’s $413bn record, according to EPFR. Low–cost index funds and ETFs are steadily hollowing out the market for traditional mutual funds, whose relatively high fees have grown harder to justify. A surge in tech stocks, led by Wall Street’s Magnificent Seven, has further weighed on active funds, since many managers hold smaller positions in these large companies.

Industry giants like Franklin Resources, T Rowe Price, Schroders and Abrdn have felt the brunt of this exodus, as their flagship stockpicking businesses fall behind cheaper options from passive giants such as BlackRock – or even alternatives specialists like Blackstone. Data show the average actively managed US equity fund returned 20 percent over one year, lagging the 23 percent from similar passive funds, and charging nine times the fees.