This is a special edition of the scorecard that looks at the performance of most prominent mutual funds over the past year. This aims to give readers a snapshot of what mutual funds posted the best and worst performance year-to-date and explain why. The performance is calculated from January 1 to November 30.
- Overall, mutual funds experienced another year of carnage in terms of flows. Around $43 billion were withdrawn from mutual funds year-to-date, with equities particularly disliked by investors. Equities had outflows of around $126 billion. Bond mutual funds saw positive flows of $124 billion, while hybrid funds experienced $41 billion in outflows.
- The flow picture for 2018 is similar to 2017 and 2016, with strong outflows from equities were offset by bond inflows. However, one difference between 2018 and 2017 is that last year total outflows were positive at $67 billion. 2016 was the worst of the three years, with total outflows standing at $196 billion.
- The macroeconomic footprint was driven by several factors. In the second year of the Donald Trump presidency, he delivered on some of his promises and started a trade war with China, although a temporary truce was reached lately. A positive for markets overall were Trump’s tax cuts, which gave a boost to the U.S. GDP.
- The Federal Reserve continued to raise interest rates this year but signaled recently it may put the brakes on future rate hikes.
- The Eurozone economy slowed down in 2018 after a few strong years, thanks to the support provided by the European Central Bank.
Technology stocks posted the best performance in 2018, in a year marked by trade wars, rising Treasury yields, and a divergence between the economies of the U.S. and the rest of the world. Total mutual fund outflows were negative this year after experiencing inflows last year. The retail sector swung back this year, proving that years of restructurings were worth doing. Finally, emerging markets suffered severe outperformance due to trade wars and currency crises.
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