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Takeaway: A whopping -$7.3 billion was yanked from domestic stock funds last week, much worse than the 2015 weekly average of -$2.9 billion.

Investment Company Institute Mutual Fund Data and ETF Money Flow:
Investors continued to pull money from financial markets last week. All asset classes experienced redemptions except for international equity funds, which took in +$3.5 billion, and equity ETFs which were only slightly above break-even at +$85 million in contributions. While an exodus from domestic equity has been in progress since 2014, a newer trend of fixed income outflows has developed. So far this year, domestic equity mutual funds have lost a cumulative -$90.8 billion in withdrawals, including a massive -$7.3 billion outflow last week (the worst start to the first 31 weeks to any year this cycle running at over -$18.0 billion worse than 2012, the prior softest start to an annual period). Meanwhile, total fixed income mutual funds and ETFs have experienced negative flows in 7 of the last 9 weeks, including a -$5.0 billion outflow last week.

Investors appear to be using a significant portion of domestic equity withdrawals for their contributions to international equity funds, as international equity has experienced an almost mirror inflow of +$92.0 billion. Additionally, the chart below displays the generally inverse relationship between domestic stock outflows and international equity inflows. Our preferred proxy for these growing domestic redemptions is shorting T. Rowe Price (TROW) stock with over 60% of its assets-under-management in mutual funds (see our TROW report HERE).


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI20


In the most recent 5-day period ending August 5th, total equity mutual funds put up net outflows of -$3.8 billion, trailing the year-to-date weekly average inflow of +$36 million and the 2014 average inflow of +$620 million. The outflow was composed of international stock fund contributions of +$3.5 billion and domestic stock fund withdrawals of -$7.3 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 -$4.4 billion, trailing the year-to-date weekly average inflow of +$1.5 billion and the 2014 average inflow of +$929 million. The outflow was composed of tax-free or municipal bond funds withdrawals of -$106 million and taxable bond funds withdrawals of -$4.3 billion.


Equity ETFs had net subscriptions of +$85 million, trailing the year-to-date weekly average inflow of +$2.3 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net outflows of -$582 million, trailing the year-to-date weekly average inflow of +$868 million and the 2014 average inflow of +$1.0 billion.

ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI1


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 | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI2


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI3


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI4


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI5


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI6



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 | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI12


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI13


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI14


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI15


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI16



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 | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI7


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors continued to make significant withdrawals from the long treasury TLT ETF given worries over a possible rate hike by the Fed. The TLT lost -$365 million or -7% in redemptions last week. Meanwhile, the XLB materials ETF experienced the largest inflow last week on both a percentage and dollar basis. Investors contributed +$122 million or +5% to the XLB.


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - 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 | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI17


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a positive +$1.2 billion spread for the week (-$3.8 billion of total equity outflow net of the -$5.0 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 +$1.9 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.)

ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - 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:


ICI Fund Flow Survey | What's $7 Billion Among Friends? Another Massive Outflow in Domestic Stocks - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 


Joshua Steiner, CFA