Equity leads DC exodus amid rising markets
Equity funds still make up most non-money market defined contribution assets, but they, however, have felt investors' ire despite rising markets. Active funds, both U.S.- and non-U.S.-focused saw $62 billion in net outflows with an average quarterly net loss of $5.2 billion. Passive equity saw less dramatic activity, with a cumulative three-year inflow of $16.3 billion, and an average $1.4 billion quarterly gain. Passive equity funds comprised 60% of all DC equity assets, as estimated by eVestment, 88% of which are in U.S.-focused funds.
Global markets over the period rose a cumulative 30.8% as measured by the MSCI ACWI IMI index, performance that was deeply scarred by a -13.3% drop in the fourth quarter of 2018. Fundamental equity managers, funds that allocate based on the financial or economic prospects of a company and make up the bulk of active equity assets, saw the most significant outflows relative to its quantitative and combined approach counterparts.