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Takeaway: In the most recent week both equity and fixed income flows were very light however equity production was the "less bad" of the two

Investment Company Institute Mutual Fund Data and ETF Money Flow:

In the most recent 5 day period, absolute money flow into both equity and fixed income mutual funds declined week-to-week, although the slack in equity fund flow was less pronounced than fixed income:

Total equity mutual fund flow decelerated sequentially week-to-week, producing a tally below the 2014 year-to-date weekly average. The $2.3 billion that came into all equity mutual funds during the most recent 5 day period ending April 16th was split between a weak $636 million inflow into U.S. equity funds and the marginally stronger $1.7 billion that moved into international stock funds. This higher demand for foreign equity products has been consistent over the past two years with international stock fund inflow having averaged $2.9 billion per week this year and $2.6 billion per week last year in 2013 with domestic fund products averaging an inflow of just $1.3 billion thus far in '14 and a $451 million inflow last year in comparison. The 2014 running weekly average inflow for all equity mutual funds is now $4.1 billion, still an improvement from the $3.0 billion weekly average inflow for 2013. 

Fixed income mutual fund flow also decelerated week-to-week, reversing last week's trend lines in the product graphs below, which had displayed improving momentum for bond funds versus equity funds. For the week ending April 16th, $659 million flowed into all fixed income funds, as opposed to last week's $1.6 billion inflow. The worsening of bond fund inflow amounted to $630 million which flowed into taxable products and a mere $29 million inflow into tax-free or municipal products. Still, the inflow into taxable products this week was the 10th consecutive week of positive flow and the inflow into municipal or tax-free products was the 14th consecutive week of positive subscriptions. The 2014 weekly average for fixed income mutual funds now stands at a $1.9 billion weekly inflow, an improvement from 2013's weekly average outflow of $1.5 billion but a far cry from the $5.8 billion weekly average inflow from 2012 (our view of the blow off top in bond fund inflow).

ETFs experienced moderately negative trends during the week, with a notable week of redemption in stock ETFs with $2.2 billion of net outflow. Bond ETFs experienced only a slightly positive inflow of $204 million for the most recent 5 day period. The 2014 weekly averages are now a $973 million weekly inflow for equity ETFs and a $931 million weekly inflow for fixed income ETFs. 

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $754 million spread for the week ($109 million of total equity inflow versus the $863 million inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.5 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.5 billion (negative numbers imply more positive money flow to bonds for the week). 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. Exchange traded fund (ETF) information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.   

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 1

Most Recent 12 Week Flow in Millions by Mutual Fund Product:

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 2

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 3

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 4

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 5

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 6

Most Recent 12 Week Flow Within Equity and Fixed Income Exchange Traded Funds:

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 7

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 8

Net Results:

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $754 million spread for the week ($109 million of total equity inflow versus the $863 million inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.5 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.5 billion (negative numbers imply more positive money flow to bonds for the week). 

ICI Fund Flow Survey - Lackluster fund flow in both Equity and Fixed Income Funds - 9 

Jonathan Casteleyn, CFA, CMT 

 

 

Joshua Steiner, CFA