Where Investors Put Their Money in 2018
For most investors, 2018 was both an eventful and frustrating year.
Between the looming threat of trade wars and growing geopolitical uncertainty, the market also skipped a beat. Volatility took center stage, and the S&P 500 finished in negative territory for the first time in 10 years.
Although many asset classes finished in negative territory, a look at fund flows – essentially where investors put their money – helps paint a more intricate picture of the year for investors.
Visualizing 2018 Fund Flows
Today’s infographic comes to us from New York Life Investments, and it visualizes the flows in and out of U.S. funds for 2018.
It not only shows when investors poured money into mutual funds or ETFs, but it also breaks down these funds by various categorizations. For example, when did people buy funds that held U.S. equities, and when did they buy funds that primarily held money market securities?
Let’s dive into the data, to take a deeper look.
Mutual Funds vs. ETFs
For another year in a row, ETFs gained ground on mutual funds:
|Type of Fund||2018 Fund Flows||Total Assets (End of Year)|
|ETFs||+$238.4 billion||$3.4 trillion (17.2%)|
|Mutual Funds||-$91.3 billion||$16.3 trillion (82.8%)|
However, despite growing for another year, ETFs still make up a smaller part of the overall fund universe.
Flows by Asset Class Group
Every fund gets classified by Morningstar based on the types of assets it holds.
For example, a fund that focuses on holding fast-growing, large tech companies in the U.S. would be classified broadly as “U.S. Equity”, and more specifically as “U.S. Equity – Large Growth”.
Here’s how flows went, within these broader groups:
|Fund Category Group||Total Assets ($mm)||Growth in 2018|
|International Equity||$ 2,787,400||3.1%|
|Money Market||$ 2,879,510||6.2%|
|Municipal Bonds||$ 795,132||0.9%|
|Sector Equity||$ 816,149||-3.7%|
|Taxable Bonds||$ 3,747,268||3.5%|
|U.S. Equity||$ 7,173,902||0.0%|
Investors pulled money from Allocation, Alternative, and Sector Equity funds, while rotating into Money Market and Taxable Bonds categories. These latter assets are considered safer, and this shift is not surprising considering the market volatility towards the end of the year.
Also interesting here is that U.S. Equity – the biggest category overall by total assets – saw equal amounts of inflows and outflows, ending with a 0.0% change on the year.
U.S. Equity: A Closer Look
U.S. Equity ended the year with zero change, but it’s also the biggest and broadest category.
Let’s break it down further – first, we’ll look at what happened to flows by market capitalization (small, mid, and large cap stocks):
|Market Capitalization||Assets||Growth (2018)|
|Large Caps||$5.6 trillion||0.2%|
|Mid Caps||$884 billion||-2.5%|
|Small Caps||$672 billion||1.7%|
Investment in funds that held large cap stocks increased by 0.2%, while the money allocated to small caps rose by 1.7% over 2018. Interestingly, investors pulled money out of mid caps (-2.5%).
Now, let’s look at U.S. Equity by type of strategy:
|Fund Strategy||Assets||Growth (2018)|
According to these flows, investors pulled money from funds focused solely on value or growth, while instead preferring funds that were a blend of the two strategies.
Finally, let’s see the types of international funds that investors bought and sold over 2018.
|Diversified Emerging Markets||4.9%|
Investors eschewed funds that had a primary focus on European, Indian, and Japanese markets, while piling into funds that held Chinese equities. Meanwhile, Latin America and emerging markets also got some love from investors.
While 2018 was an eventful year for markets, this recap shows that investors are adjusting their portfolios accordingly.
Where will investors put their money in 2019?
The Top Google Searches Related to Investing in 2022
What was on investors’ minds in 2022? Discover the top Google searches and how the dominant trends played out in portfolios.
The Top Google Searches Related to Investing in 2022
It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most?
This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.
Top Google Searches: Year in Review
We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.
|Month of Peak Interest||Search Term|
|February||Russian Stock Market|
|December||Interest Rate Forecast|
Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.
Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.
The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak of $125 per barrel was a 13-year high.
|Date||Closing Price of WTI Crude Oil
|January 2, 2022||$76|
|March 3, 2022||$125|
|December 29, 2022||$80|
While crude oil lost nearly all its gains by year-end, the energy sector in general performed well. In fact, the S&P 500 Energy Index gained 57% over the year compared to the S&P 500’s 19% loss.
The second quarter of 2022 saw abnormal house price growth, renewed interest in value investing, and a bitcoin crash. In particular, value investing performed much better than growth investing over the course of the year.
|Index||Price Return in 2022|
|S&P 500 Value Index||-7.4%|
|S&P 500 Growth Index||-30.1%|
Value stocks have typically outperformed during periods of rising rates, and 2022 was no exception.
The third quarter was defined by worries about a recession and inflation, along with interest in the rising U.S. dollar. In fact, the U.S. dollar gained against nearly every major currency.
|Currency||USD Appreciation Against Currency
(Dec 31 2020-Sep 30 2022)
Higher interest rates made the U.S. dollar more attractive to investors, since it meant they would get a higher return on their fixed income investments.
The end of the year was dominated by OPEC cutting oil production, high layoffs in the tech sector, and curiosity about the future of interest rates. The Federal Reserve’s December 2022 economic projections offer clues about the trajectory of the policy rate.
The Federal Reserve expects interest rates to peak in 2023, with rates to remain elevated above pre-pandemic levels for the foreseeable future.
The Top Google Searches to Come
After a year of volatility across asset classes, economic uncertainty remains. Which themes will become investors’ top Google searches in 2023?
Find out how New York Life Investments can help you make sense of market trends.
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