This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes product trends as of June 2023, including mutual funds and exchange-traded funds (ETFs), and the factors influencing affluent investors’ investment product decisions.

Highlights from this research:

• Mutual funds closed the first half of 2023 on a positive note, growing 4.1% to $17.7 trillion. This is up nearly $1 trillion from the February 2023 low of $16.8 trillion. The vehicle continues to suffer negative net flows as older investors draw down mutual fund holdings to fund their retirements, while new investments are diversified across other investment vehicles (e.g., ETFs, SMAs, CITs).

• ETFs also ended the first half on a positive note, experiencing a higher relative growth in assets during June (5.1%) to reach $7.3 trillion in total assets. Investor demand for ETFs continues to present itself within net flow data as the vehicle added more than $70 billion in positive net flows during June.

• Significant differences exist between how segments within the affluent investor market make investment decisions. For instance, Advice Seekers consider a relatively broad range of options when searching for guidance on their investment journeys. This willingness to consider a wide variety of criteria and options highlights the opportunity for product providers to address this substantial segment with solutions outside their core lineup. Self-Directed investors are more likely to consider past performance in their analysis of mutual funds (63%) than of ETFs (39%), for which cost of the investment (42%) is their leading concern. Within the large Advisor-Reliant market, advisor recommendation ranks first in the selection of both mutual funds (57%) and ETFs (62%), underscoring the absolute importance for asset managers to nurture their practice-level advisor relationships.