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Active stock funds draw $36B in July as dividend yields hit lows

Year-to-date active equity inflows reached $272.5 billion, as the S&P 500 dividend yield near 1.08% has encouraged investors to seek income via options and stock picking.

Reported · Written up by our desk · Fund Industry

Investors looking for income are increasingly shifting into active stock funds as traditional index income weakens, ETF Trends reported. Active stock funds attracted $36 billion in inflows in July, bringing year-to-date inflows to $272.5 billion and keeping the category on pace for a record year, according to State Street Investment Management.

The push comes as the S&P 500 dividend yield sits near 1.08%, its lowest level since July 2000. With plain index funds delivering less income than in prior periods, the report said more investors are favoring active strategies that aim to generate cash payouts through stock selection and options.

ETF Trends also highlighted how traditional active equity funds pulled in $28.7 billion in July, led by technology with $6.8 billion. Large-blend and large-value strategies added $4.2 billion and $3.2 billion, respectively, and the report noted large-cap funds saw the heaviest inflows even though fewer than half of active large-blend and large-value managers beat their benchmarks over the past year.

The report pointed to non-traditional active equity strategies drawing $7.4 billion in July, with derivative income funds accounting for most of the total at $6.9 billion. It also cited defined income and option-based approaches, including covered call and derivative income funds, as drivers of the shift toward income-focused active management.

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