The incredible rise in popularity of index funds since the last financial crisis in 2008 appears to be losing momentum. Volatile markets, investor anxiety and concerns surrounding a potential market downturn are slowing the flow of funds into index funds. Per an article in the WSJ, net inflows dropped to $3.4 billion in June; resulting in the smallest monthly sum since early 2014.
“For the first six months of 2018 passive inflows were down 44%, compared with the same period a year earlier.”
This appears to be a retreat to safety. Actively managed funds have also lost $29 billion in funding in the first half of 2018. Active managers have been hoping that increased volatility and uncertainty would reverse the flow of funds that have been exiting active funds, which is now approximately $500 billion since 2015.