August 25, 2017

Fidelity Equity Mutual Funds Continue to Suffer Net Outflows

by Patrick Keon

Equity mutual funds managed by Fidelity Management & Research Company have experienced net outflows of $26.5 billion for the year to date. This comes on the heels of 2016, during which Fidelity equity funds saw the most net money leave their coffers (-$46.5 billion) since Thomson Reuters Lipper began tracking fund-flows data in 1992. At its current pace this year’s net outflows will far surpass Fidelity’s second largest annual net outflows ever (-$29.9 billion for 2008) and challenge last year’s record-setting number.

The trend for Fidelity equity funds is similar to what we’ve seen in the overall equity mutual fund market. Investors are shying away from actively managed funds and funds that invest in domestic stocks and are putting their money into funds that passively replicate an index and funds that invest in nondomestic stocks. Overall this year, equity funds have had negative net flows of $51.1 billion, with domestic equity funds driving that number with net outflows of $80.5 billion and nondomestic equity funds taking in $29.4 billion of net new money. The numbers are similar for Fidelity, with domestic equity funds (-$30.1 billion) accounting for all of its net outflows and nondomestic equity funds (+$3.6 billion) experiencing net positive flows. For the equity fund universe as a whole passively managed funds have taken in net new money, while actively managed funds have seen their coffers shrink. Fidelity’s activity mirrors that, with actively managed funds suffering net outflows of $41.6 billion and index funds having net-positive flows of $15.1 billion.

For Fidelity the five largest net outflows for the year to date all belong to actively managed domestic equity funds. These funds account for net outflows of $25.7 billion, with the two largest belonging to Fidelity Contrafund (-$7.3 billion) and Fidelity Series Value Discovery Fund (-$6.8 billion). Conversely, the two largest net inflows for the year to date belong to a nondomestic equity fund (Fidelity Series Intrinsic Opportunistic Fund, +$3.5 billion) and a passively managed index fund (Fidelity SAI US Large Cap Index Fund, +$2.8 billion).


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