Fund managers are increasingly cautious about their stock-picking abilities in the wake of the financial crisis, as investors continue to move billions of dollars out of actively-managed investment vehicles in search of cheaper index-tracking funds.
According to research firm Morningstar's estimates, traditional managed funds have bled some $7.6 billion and $24.9 billion in the one- and three-year periods to 30 June 2014, respectively.
The report, which confirms market speculation that investors have been seeking out less volatile and lower-fee funds since being rocked by the financial crisis in 2008, also found that the average large-cap Australian share fund manager has become considerably less active in their stock picking, and many have been moving closer to trading in line with the benchmark - an approach more closely linked to passive-style investing.
Australian equity exchange-traded funds (ETFs) attracted significant in-flows of about $850 million and $1.3 billion for the 12- and 36-month periods to 30 June 2014.
The Vanguard Australian Shares Index (ETF) was the Australian equity ETF with the biggest in-flows in the 12 months to June 20, gaining a net $221 million. The fund returned 4.77 per cent in the 2014 financial year.
By contrast, one of the highest returning actively managed funds covered by the Morningstar research was Perpetual's Wholesale Industrial Fund, which gained investors a 27.8 per cent return over the same period.
In Morningstar's Australian equities large-cap sector wrap, the fund that had experienced the biggest move from active to a more passive-style approach was Acadian Wholesale Australian Equity. The fund returned 3.78 per cent last financial year.
Among the most active stock pickers have been Ausbil Australian Active Equity, the Fidelity Australian Equities fund and Tyndall's Australian Share Income fund.
