Not-for-Profits Look to Emerging Market and Global Equities

U.S. active fundamental equities attracted large inflows in the last twelve months, but overall net flows were negative as investors divested from traditional strategies. Within the defined contribution and not-for-profit channels, domestic and global/international destinations attracted inflows in excess of $70 billion. But redemptions from more traditional, plain-vanilla strategies resulted in total net outflows of more than $8 billion. Strategies that diversify across geographic regions and with an ex-U.S. focus captured solid inflows and net flows, especially in products with a growth focus. As Callan has advised its clients: “The case for active management varies greatly by market capitalization. Passive is typically appropriate for large-cap U.S equity. Active management is compelling for small/mid-cap, global ex-U.S. and non-U.S. small cap."