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Takeaway: International equity funds and equity ETFs continue to benefit from domestic equity outflows.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

In the most recent 5-day period ending July 22nd, investors continued to redeem funds from active domestic equity funds with the category losing another -$3.2 billion last week. Investors instead re-distributed these proceeds into international equity funds and domestic ETFs with inflows last week of +$5.0 billion and +$1.3 billion respectively. The shift to passive from active domestically has been pervasive with over +450 billion having moved into U.S. ETFs over the past 3 years against the -$175 billion drawn down from domestic funds. With $6.2 trillion remaining in domestic mutual funds versus $1.2 trillion in U.S. ETFs, there is plenty of track left for passives to gain share. With this secular opportunity for ETFs, we continue to remain bearish on shares of leading active managers including T. Rowe Price (see report here) and Janus Capital Group (see report here). 

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI19

In the most recent ICI survey for last week, all categories experienced modest inflows except for domestic mutual funds:


ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI1


In the most recent 5-day period ending July 22nd, total equity mutual funds put up net inflows of +$1.9 billion, outpacing the year-to-date weekly average inflow of +$220 million and the 2014 average inflow of +$620 million. The inflow was composed of international stock fund contributions of +$5.1 billion and domestic stock fund withdrawals of -$3.2 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 +$1.6 billion, trailing the year-to-date weekly average inflow of +$1.9 billion but outpacing the 2014 average inflow of +$929 million. The inflow was composed of tax-free or municipal bond funds contributions of +$250 million and taxable bond funds contributions of +$1.3 billion.

Equity ETFs had net subscriptions of +$1.4 billion, trailing the year-to-date weekly average inflow of +$2.5 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net inflows of +$1.7 billion, outpacing the year-to-date weekly average inflow of +$935 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:

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI2

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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.

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI12

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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:

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI7

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI8

Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, the long treasury TLT ETF took in contributions of +$285 million or +6% as investors felt jitters over the lack of breadth in the equity market's recent highs.

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI9

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.

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI17

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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 -$58 million spread for the week (+$3.2 billion of total equity inflow net of the +$3.3 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 +$1.8 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 -$18.1 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:

ICI Fund Flow Survey | International Funds and Equity ETFs Reaping the Benefits - ICI11 

Jonathan Casteleyn, CFA, CMT 

 

 

Joshua Steiner, CFA