Index Funds Are Going to Be Just Fine
Inflows have slowed? Actively managed funds would like to have that problem.
Bloomberg, July 18, 2018
A few recent observers have pointed out that inflows into index funds have slowed recently. See, e.g., this or this.
I believe these folks are simply confusing correlation with causation or otherwise using sloppy reasoning.
I speak regularly with senior management at Vanguard and DFA (and less regularly to their peers at other firms). I would not describe what they are doing “grappling” with the slowdown. It has been a torrent of capital hitting their accounts, and I suspect they welcome the opportunity to digest these gains, and allow their system-wide updates to catch up to the huge increase in their assets under management (AUM).
I cannot find my data source on this, but using Vanguard as an example, if this years inflows occurred either in 2014 or 2015, it would have been an all time record.
UPDATE:
Here are annual global net inflows to Vanguard in billions:
2011: 78
2012: 147
2013: 151
2014: 243
2015: 256
2016: 330
2017: 372
1st half 2018: 111
So at current rates, 2018 inflows would be better than 2012 or 2013 . . .
See the complete column here
