Q2 DC net flows highest in 3 years
Defined contribution investors put a net $13 billion into their retirement plans in the second quarter, by far the most in the past three years. U.S.-based assets typically assume the bulk of asset flows, with the second quarter not an exception. However, emerging markets and EAFE funds each had more than $2 billion in net flows.
The jump in new money followed the first quarter where global equities (MSCI ACWI TR index) were up 12.2% and U.S. equities (Russell 3000 TR) gained 14%. While gains continued into the following quarter, they slowed into the back stretch of 2019. Investors that put a combined $2.2 billion into emerging markets funds in the first half have since seen a 3.7% decline in the third quarter through Tuesday's trading, and EAFE investors have lost 1.6% based on index performance.
Cumulatively, U.S. equity funds have lost a net $28.3 billion since June 2016 from DC investors, the most of the observed asset classes. Data provider eVestment did not break out those flows by active and passive. U.S. bond funds led the group over the period with $14.6 billion in net flows. Emerging market fund flows were positive over the three years, with negative flows in only two out of the past 12 quarters.