Investment Company Institute Mutual Fund Data and ETF Money Flow:
In the most recent 5 day period ending August 6th, taxable bond funds snapped 2 months of consecutive weekly inflows with a substantial $8.6 billion redemption driven by geopolitical fears and mixed domestic economic signals. The snap outflow in the category was the biggest redemption since the week of June 26th, 2013 during the Taper Tantrum where $20.4 billion in a single week was called in by investors. Despite the panic in taxable fixed income last week, the category has had inflows in 24 of the past 26 weeks, so we will be monitoring if this about face has longer standing implications. Domestic stock fund flows also continued to struggle in the most recent survey with another $3.0 billion withdrawal by investors last week, much worse than the running 2014 weekly average of a $652 million redemption, making it 15 consecutive weeks of outflows in domestic stock funds. Janus Capital (JNS) and T Rowe Price (TROW) have the most exposure to negative retail equity fund trends with 60% and 40% of assets-under-management respectively in domestic stock funds.
Total equity mutual funds put up a slight outflow in the most recent 5 day period ending August 6th with $422 million being redeemed from the all stock category as reported by the Investment Company Institute. The composition of the outflow continued to be weighted towards domestic stock funds with $3.0 billion being withdrawal from the category in now the 15th consecutive week of outflows. These withdrawals were again cushioned by a $2.6 billion inflow into international equity funds which have experienced subscriptions (inflows) in every week of 2014. The running year-to-date weekly average for combined equity fund flow is now a $1.5 billion inflow, which is well below the $3.0 billion weekly average inflow from 2013.
Fixed income mutual funds experienced mixed trends last week with the aforementioned taxable redemption of $8.6 billion offset by a slight inflow into municipal or tax-free products of $454 million. Intermediate term bond momentum continues despite the dramatic outflow last week with inflow in 24 of the past 26 weeks in taxable bonds and municipals tallying 29 of the past 30 weeks with positive subscriptions. The 2014 weekly average for fixed income mutual funds now stands at a $1.8 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 volatile during the week with inflows into bond funds and substantial outflows in stock funds. Equity ETFs lost a massive $15.5 billion last week, the biggest outflow since the week of February 5th where $27.4 billion was redeemed in stock ETFs. Fixed income ETFs conversely put up a decent sized inflow with $2.7 billion flowing into bond products. The 2014 weekly averages are now a $1.2 billion weekly inflow for equity ETFs and a $883 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 $10.4 billion spread for the week ($15.9 billion of total equity outflow versus the $5.4 billion outflow 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 $4.3 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.
Most Recent 12 Week Flow in Millions by Mutual Fund Product:
Most Recent 12 Week Flow Within Equity and Fixed Income Exchange Traded Funds:
Net Results:
The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a negative $10.4 billion spread for the week ($15.9 billion of total equity outflow versus the $5.4 billion outflow 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 $4.3 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).
Jonathan Casteleyn, CFA, CMT
Joshua Steiner, CFA
