This issue of The Cerulli Edge-U.S. Monthly Product Trends analyzes product trends through January 2024, including mutual funds and exchange-traded funds (ETFs), and explores the product and service offerings being adopted by high-net-worth (HNW) practices.
The report highlights that mutual fund assets declined by just $10 billion to $18.5 trillion in January, due to the small effects of both net outflows and market developments. However, in terms of flows, this was their best month since a year ago January 2023.
In addition, ETF assets grew by 0.6% in January thanks to net flows of $43.5 billion, and reached a new all-time high. The split of flows between active and passive ETFs was notably tight at $20.9 billion and $22.7 billion, respectively. Commodity and allocation ETFs had a particularly bad month in January, with losses of 2.5% and 2.3% of assets by flows for the month, respectively.
On the other hand, the uncertain economic, currency and political outlook-as well as increased emphasis on tax awareness and ESG considerations-are prompting high-net-worth (HNW) wealth management firms to enhance their strategic asset allocation services in many ways.
In this context, Cerulli highlights that the integration of customization and optimization tools (e.g., direct indexing) into wealth managers’ standard asset allocation service offerings is increasing the ability of firms to provide their clients with additional value. The implementation of more customized investment solutions and access to private market investing at client scale increasingly requires intermediaries to have a robust ecosystem of account aggregation and performance reporting.