ICI Fund Flow Survey | Greek Drama Prompted a Flock to Money Markets

Takeaway: In the wake of Greek drama, investors pulled funds almost indiscriminately and parked cash in money market funds last week.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

Investors reacted to Greek drama in the 5-day period ending July 1st by pulling funds from all asset classes except for international equity mutual funds and parking +$13 billion in money market funds. The withdrawals included -$5.5 billion of outflows from active domestic equity mandates, the 18th consecutive weekly outflow from the asset class. Active domestic equity has now lost -$61.3 billion in withdrawals in 2015, pushing 2015 year-to-date outflows lower than 2012. By this time in 2012, domestic equity funds had lost -$58.9 billion. This now makes 2015 the worst fund flow year for domestic equity from 2007 onward. We maintain our Short/Avoid recommendations on the most impacted domestic equity managers, T. Rowe Price (TROW) and Janus Capital (JNS).

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In the most recent 5-day period ending July 1st, total equity mutual funds put up net outflows of -$3.4 billion, trailing the year-to-date weekly average inflow of +$369 million and the 2014 average inflow of +$620 million. The outflow was composed of international stock fund contributions of +$2.1 billion and domestic stock fund withdrawals of -$5.5 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 outflows of -$2.4 billion, trailing the year-to-date weekly average inflow of +$2.2 billion and the 2014 average inflow of +$929 million. The outflow was composed of tax-free or municipal bond funds withdrawals of -$861 million and taxable bond funds withdrawals of -$1.5 billion.

Equity ETFs had net redemptions of -$4.3 billion, trailing the year-to-date weekly average inflow of +$2.1 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net outflows of -$268 million, trailing the year-to-date weekly average inflow of +$867 million 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:

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Cumulative Annual Flow in Millions by Mutual Fund Product: Chart data is the cumulative fund flow from the ICI mutual fund survey for each year starting with 2008.

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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:

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Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors defensively contributed +8% or +$365 million to the long treasury TLT ETF. Additionally, the industrial XLI ETF experienced withdrawals of -$334, -5% of its market cap.

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Cumulative Annual Flow in Millions within Equity and Fixed Income Exchange Traded Funds: Chart data is the cumulative fund flow from Bloomberg's ETF database for each year starting with 2013.

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Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$5.1 billion spread for the week (-$7.7 billion of total equity outflow net of the -$2.7 billion outflow from 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 -$18.3 billion (negative numbers imply more positive money flow to bonds for the week.)

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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:

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Jonathan Casteleyn, CFA, CMT 

 

 

Joshua Steiner, CFA