$450bn flows out of active funds

Good morning and welcome to the final FirstFT Americas of 2024. Today’s highlights include:

• A record exodus from active equity funds

• Trinidad and Tobago declares a state of emergency

• FT writers make their 2025 predictions

• And who killed the rave?

The shift away from actively managed stock funds into cheaper index-tracking investments accelerated this year.

Outflows from stockpicking mutual funds rose to a record $450bn in 2024, eclipsing last year’s previous high of $413bn, according to data from EPFR.

Traditional mutual funds have struggled to justify their relatively high fees in recent years, with their performance lagging behind the gains for Wall Street indices, which have been powered by big technology stocks. Active managers typically invest less in such companies than their benchmark indices.

The trend has accelerated in recent years as older investors, who typically favour these products, cash out and retire while younger investors choose to put their savings in index-tracking ETFs. Read more on the trend that is reshaping the fund management industry.

And here’s what else we’re keeping tabs on today:

• New year celebrations: From Sydney and London to New York, public events will mark the start of 2025. Edinburgh’s famous Hogmanay celebrations, however, have been cancelled due to concerns over “extreme weather”.

FirstFT Americas is taking a break tomorrow and will return on Thursday.

Five more top stories

1. A Chinese state-sponsored actor hacked the US Treasury department through a third-party service provider in a “major cyber security incident”, the agency said yesterday. The department has been working with the FBI to determine the impact of the hack, it said in a letter to a Senate committee seen by the FT.

2. The government of Trinidad and Tobago has declared a state of emergency over an unprecedented crimewave as violence surges across the Caribbean, partly fuelled by weapons from the US. The country, with a population of 1.5mn, has experienced its highest number of murders on record this year.

3. BlackRock is heading for a showdown with US banking regulators. The Federal Deposit Insurance Corporation has given the $11.5tn investment giant until January 10 to accept proposed new compliance measures whenever it owns more than 10 per cent of the outstanding shares in FDIC-supervised banks, people familiar with the situation said. Brooke Masters in New York has more details.

4. A possible global trade war and regional political paralysis are the two biggest threats facing the Eurozone economy in 2025, according to a Financial Times poll of 72 economists. The region, which holds a large trade surplus with the US, is seen as acutely exposed to not only higher US tariffs but also the threat of China dumping cheap products on global markets.

5. Donald Trump threw his support behind Mike Johnson for Speaker of the House, giving the embattled lawmaker a crucial endorsement amid Republican infighting ahead of a vote on who will lead the lower chamber of Congress on Friday. Johnson said he was “honoured and humbled” by the president-elect’s support. Here’s more on a pivotal moment for Johnson.

We are planning to publish a special edition of FirstFT Americas ahead of the inauguration on January 20. Please submit your questions to firstft@ft.com, giving your name and location, and we will put them to our experts to answer.

Forecasting 2025

FT writers have penned their best guesses for the new year, from the likelihood of peace in Ukraine, to whether the friendship between Donald Trump and Elon Musk will endure, and the chances of a CD revival. Read our forecasts and submit your own.

We’re also reading . . . 

Map of the day

Climate change is redrawing Europe’s wine map. Extreme weather is pushing viticulture into colder northern territories while forcing traditional winemaking regions such as Bordeaux and Rioja to grapple with hotter weather. Susannah Savage reports from Denmark where wine production has tripled in the past decade.

The story you commented on most in 2024

Readers had a lot of thoughts about the June news that wealthy foreigners were stepping up plans to leave the UK as taxes increased, with more than 2,500 leaving comments. Here’s a selection:

If your only motivation for being in Britain is you want to pay less tax and a when a democratically elected government asks you to do pay slightly more you have a tantrum and leave then good riddance. Enjoy being a citizen of nowhere. — Reader Tony, Islington

It is rich people that pay the vast majority of taxes. If they leave the country and pay nothing, everyone else either has to pay more or face big cuts in government spending. Policies driven by petty jealousies and envy end up costing those who are envious the most. — Reader Androcydes

“I’ve worked my backside off for 25 years, having worked my butt off all through school. I’ve saved enough to retire age 49. You can be jealous, but I went to state school, started with nowt and my grandad was a builder. I am now going to move to Portugal (Golden visa for €500k), and whilst there I will be avoiding all this nonsense and paying 10 per cent tax. Plus getting a tan. — Reader 8