ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds

Takeaway: Domestic equity funds experienced their first contribution in 27 weeks, but 2015 remains the worst year on record for the asset class.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

In the 5-day period ending September 2nd, domestic equity funds experienced a +$1.8 billion contribution, the first positive flow to the asset class in 27 weeks. International equity funds also rebounded modestly with a +$191 million addition after last week's first registered redemption all year. Investors sourced the funds from bond products and money market funds. Taxable bond funds, tax-free bond funds, and money market funds gave up -$5.8 billion, -$510 million, and -$16.0 billion respectively, as fixed income markets have also been volatile.

 

Even with last week's contribution, domestic equity funds remain at a -$106.3 billion total outflow for 2015, -$20.5 billion worse at the same point in 2012 and -$41.8 billion worse than the same point in 2008. 2008 and 2012 are the second and third worst years on record after the current running 2015 period for domestic equity flows. T. Rowe Price (TROW) stock with over 60% of its assets-under-management (AUM) in mutual funds and 85% of its AUM in domestic products continues to be our Short/Avoid proxy on these trends (see our TROW report HERE).


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI1


In the most recent 5-day period ending September 2nd, total equity mutual funds put up net inflows of +$2.0 billion, outpacing the year-to-date weekly average outflow of -$190 million and the 2014 average inflow of +$620 million. The inflow was composed of international stock fund contributions of +$191 million and domestic stock fund contributions of +$1.8 billion. International equity funds have had positive flows in 47 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 -$6.3 billion, trailing the year-to-date weekly average inflow of +$635 million and the 2014 average inflow of +$926 million. The outflow was composed of tax-free or municipal bond funds withdrawals of -$510 million and taxable bond funds withdrawals of -$5.8 billion.


Equity ETFs had net subscriptions of +$7.4 billion, outpacing the year-to-date weekly average inflow of +$2.0 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net inflows of +$6.5 billion, outpacing the year-to-date weekly average inflow of +$1.0 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:


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI2


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI3


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI4


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI5


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - 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 | A Blip Up for Domestic Equity Funds - ICI12


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI13


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI14


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI15


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - 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 | A Blip Up for Domestic Equity Funds - ICI7


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors contributed +$7.2 billion or +5% to the S&P 500 SPY ETF on higher confidence in the U.S. market following positive GDP data and dovish comments from Fed President William Dudley.


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - 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 | A Blip Up for Domestic Equity Funds - ICI17


ICI Fund Flow Survey | A Blip Up for Domestic Equity Funds - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a positive +$9.2 billion spread for the week (+$9.3 billion of total equity inflow net of the +$158 million 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 +$1.9 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 | A Blip Up for Domestic Equity Funds - 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 | A Blip Up for Domestic Equity Funds - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 


Joshua Steiner, CFA







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