J.P. Morgan Asset Management was the most popular active manager in the U.S. in October, driven by capital flows into the J.P. Morgan International Research Enhanced Equity Fund. The asset management arm of the giant New York bank brought in a total of $4.6 billion in net flows in October, according to Morningstar’s most recent monthly data. The popular equity fund accounted for $3.1 billion of the total. J.P. Morgan also had the third hottest fund last month: its Large-Cap Growth Fund run by Giri Devulapally.
[II Deep Dive: How Do You Save Active Management?]
Blockbuster funds have been the primary force driving flows to active managers. In October, with two of the top three most-wanted funds, JPMAM unseated PIMCO as the top selling fund shop. The PIMCO Income Fund, managed by Dan Ivascyn, has fueled investments with the Newport Beach, California bond shop. Over the last year, the income fund brought in a whopping $28.5 billion in assets.
As the year draws to a close, Morningstar data also show that 2017 is on track to be the eleventh straight year of outflows from actively managed equity funds in the U.S. Asset managers have been under pressure to consolidate and consider other measures, given the sustained popularity of index funds since the financial crisis.
Fidelity Investments, which was once almost synonymous with active stock pickers, has been suffering from a shrinking active fund business. Over the past 12 months ending in October, Fidelity had net outflows of $54 billion. During the month of October, it lost almost $5 billion. But, like many of its competitors, Fidelity’s index-tracking funds are seeing inflows. These gained $8.4 billion in October and $50 billion for the year. Meanwhile, the fund company has been slashing prices on its index funds in a bid to be more competitive.
Franklin Templeton Investments, another stalwart active manager, lost $30 billion over the year from active and $3.6 billion in October.
With U.S. stock markets continuing to hit highs, asset managers will likely end up having a good year. Morningstar reports that the broader industry is on track to have the strongest inflows since 1993.