• It's Coming...

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds

Takeaway: U.S. stock funds put up their 14th consecutive week of outflow with bond fund inflows holding steady

Investment Company Institute Mutual Fund Data and ETF Money Flow:

In the most recent 5 day period, the combined equity mutual fund complex eked out a slight $205 million inflow with steady International stock fund subscriptions rescuing now the 14th consecutive week of outflow in U.S. stock funds. Aggregate bond funds conversely, including both taxable and tax free products, netted another $1.7 billion in new money making it 24 of 25 weeks of taxable bond inflows with 28 of 29 weeks of positive subscriptions into tax-free or muni bonds. 

Total equity mutual funds put up a slight inflow in the most recent 5 day period ending July 30th with $205 million coming into the all stock category as reported by the Investment Company Institute. The composition of the inflow continued to be weighted towards International stock funds with $1.4 billion coming into the category offset by the ongoing 14 week redemption in domestic equity funds which totaled a $1.2 billion redemption. This drawdown in domestic equity funds has now totaled a $37 billion outflow over the past 3 1/2 months. The running year-to-date weekly average for equity fund flow is now a $1.6 billion inflow, which is now below the $3.0 billion weekly average inflow from 2013. 

Fixed income mutual fund flows had another positive week of production with $1.7 billion coming into the asset class. The inflow into taxable products of $1.1 billion made it 24 of 25 weeks with positive flow for the category. Municipal or tax-free bond funds put up a $687 million inflow making it 28 of 29 weeks with positive subscriptions. The 2014 weekly average for fixed income mutual funds now stands at a $2.1 billion weekly inflow, an improvement from 2013's weekly average outflow of $1.5 billion, but still a far cry from the $5.8 billion weekly average inflow from 2012 (our view of the blow off top in bond fund inflow). 

ETF results were broadly positive during the week with inflows into both equity funds and fixed income products. Equity ETFs put up a robust $9.1 billion subscription, making it 8 of 10 weeks with significant inflows, while fixed income ETFs put up a slight $764 million inflow. The 2014 weekly averages are now a $1.7 billion weekly inflow for equity ETFs and a $822 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 positive $6.8 billion spread for the week ($9.3 billion of total equity inflow versus the $2.5 billion 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 $4.8 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 - A Running 3 1/2 Month Outflow in U.S. Stock Funds - final recap

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

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 2

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 3

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 4

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 5

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 6

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

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 7

ICI Fund Flow Survey - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 8

Net Results:

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a positive $6.8 billion spread for the week ($9.3 billion of total equity inflow versus the $2.5 billion 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 $4.8 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 - A Running 3 1/2 Month Outflow in U.S. Stock Funds - ICI chart 9 

Jonathan Casteleyn, CFA, CMT 

 

 

Joshua Steiner, CFA