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Takeaway: Investors moved defensively last week, making net withdrawals from all equity products and shoring up cash in money market funds.

This note was originally published May 28, 2015 at 07:13. For more information on Hedgeye's wide array of smart investment products click here.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

Fund flows were defensive in the 5-day period ending May 20th with total net equity products in outflow. Investors instead moved to the sidelines with +$20.6 billion of cash being added to money market funds last week. There were some pockets of strength with international equity mandates experiencing their second largest inflow in 2015 of +$4.3 billion. However, this was not enough to balance out the -$5.4 billion withdrawal from domestic equity funds. Investors have now pulled -$38.6 billion from domestic equity funds so far in 2015 versus +$11.6 billion in contributions over the same period last year. 


Fund Flows | Defense Takes the Field - z cast 1

In the most recent 5-day period ending May 20th, total equity mutual funds put up net outflows of -$1.1 billion, trailing the year-to-date weekly average inflow of +$713 million and the 2014 average inflow of +$620 million. The outflow was composed of international stock fund contributions of +$4.3 billion and domestic stock fund withdrawals of -$5.4 billion. International equity funds have had positive flows in 48 of the last 52 weeks while domestic equity funds have had only 10 weeks of positive flows over the same time period.

Fixed income mutual funds put up net inflows of +$2.0 billion, trailing the year-to-date weekly average inflow of +$2.3 billion but outpacing the 2014 average inflow of +$929 million. The inflow was composed of tax-free or municipal bond funds withdrawals of -$138 million and taxable bond funds contributions of +$2.1 billion.

Equity ETFs had net subscriptions of +$1.0 billion, trailing the year-to-date weekly average inflow of +$1.6 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net outflows of -$632 million, trailing the year-to-date weekly average inflow of +$1.2 billion and the 2014 average inflow of +$1.0 billion.

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: Chart data is the most recent 12 weeks from the ICI mutual fund survey and includes the weekly average for 2014 and the weekly year-to-date average for 2015:

Fund Flows | Defense Takes the Field - ICI2

Fund Flows | Defense Takes the Field - ICI3

Fund Flows | Defense Takes the Field - ICI4

Fund Flows | Defense Takes the Field - ICI5

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Most Recent 12 Week Flow Within Equity and Fixed Income Exchange Traded Funds: Chart data is the most recent 12 weeks from Bloomberg's ETF database (matched to the Wednesday to Wednesday reporting format of the ICI), the weekly average for 2014, and the weekly year-to-date average for 2015. In the third table are the results of the weekly flows into and out of the major market and sector SPDRs:

Fund Flows | Defense Takes the Field - ICI7

Fund Flows | Defense Takes the Field - ICI8

Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, the long treasury TLT ETF saw somewhat of a recovery after a string of withdrawals. Investors contributed +$253 million or +5% to the fund.

Fund Flows | Defense Takes the Field - ICI9

Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$1.4 billion spread for the week (-$59 million of total equity outflow net of the +$1.4 billion inflow to fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52-week moving average is +$1.4 billion (more positive money flow to equities) with a 52-week high of +$27.9 billion (more positive money flow to equities) and a 52-week low of -$13.1 billion (negative numbers imply more positive money flow to bonds for the week.)

Fund Flows | Defense Takes the Field - ICI10

Exposures: The weekly data herein is important for the public asset managers with trends in mutual funds and ETFs impacting the companies with the following estimated revenue impact:

Fund Flows | Defense Takes the Field - ICI11 

Jonathan Casteleyn, CFA, CMT 

203-562-6500 

jcasteleyn@hedgeye.com 

Joshua Steiner, CFA

203-562-6500

jsteiner@hedgeye.com