Money going back into stock mutual funds for first time in 4 years

[ergophobe]

Have investors started to sour on ETFs? According to TrimTabs Investment Research, more than $7.5 billion has plowed into US and global stock mutual funds this month, with US funds taking in $3.4 billion of that.

If American funds finish the month with inflows, it will be the first time that's happened since February 2015.

https://www.cnn.com/business/live-news/dow-today-1-28-2019/h_edc0aabac77af8f19cc6c9725c95268e

[littleman]

The rebound for mutual funds is a win for active money managers who pick stocks instead of blindly betting on indexes, as many ETFs do. Investors have fallen in love with passive ETFs over the past few years because they have lower fees and also have tended to do better than mutual funds.

But US stock ETFs have shed more than $14 billion in January even as the market has bounced back. That's the biggest monthly drop since last February -- when the Dow plunged more than 1,000 points twice in a span of a few days.

This is just weird to me.  Perhaps the shift is because people are uncertain about the future and they believe that the professionals will do a better job?

[Travoli]

Some theorize that too much indexing will cause exploitable inefficiencies. The more people index, the better chance pickers have to beat them.

Here's one from John Bogle, of all people.

https://www.marketwatch.com/story/john-bogle-has-a-warning-for-index-fund-investors-2017-06-01

"The market is not entirely owned by indexers, of course, and it never will be, and Bogle pointed out that as indexing increases to a certain point, it opens opportunities for active investors to exploit inefficiencies in the pricing of some stocks. But past that point, wherever it might be — somewhere beyond 75%, in his view — the market could become a dangerous place."

[ergophobe]

I remember the Bogle article and was surprised by the assertion that below 75% of total market, indexing would still work. That seems high and like you would start to have a situation where minor changes have huge follow-on effects as 75% of the market has to buy and sell based on the behavior of 25%

It seems like you would end up with exaggerated fluctuations.