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Takeaway: Widespread withdrawals in the 5 days ending September 9th erased last week's inflow into equity funds with stock ETFs also losing.

This note was originally published September 17, 2015. If you would like more information on how you can subscribe to our institutional research please email sales@hedgeye.com.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

China's downward revised GDP and consternation over the upcoming FOMC meeting contributed to defensive reallocations in the 5-day period ending September 9th. Investors allocated +$3.3 billion to fixed income ETFs while withdrawing funds from all other asset classes. The spread between total fixed income products and total equity products was highly defensive with an $18.7 billion skew to fixed income, well below the average +$1.6 billion 52-week average benefiting equities. In specific ETF callouts, the S&P 500 SPDR SPY lost -$10.1 billion or a -5% net redemption while the long Treasury TLT gained +$255 million or +4% NAV gain.

Finally, defensive posturing continues to hurt domestic equity funds. The asset class lost -$3.0 billion to redemptions last week, erasing the prior week's inflow and bringing the year-to-date outflow to -$109.2 billion. T. Rowe Price (TROW) stock continues to be our Short/Avoid proxy on these trends. (See our TROW report HERE.)


Fund Flows | The Best Offense is a Good Defense - z cast 1


In the most recent 5-day period ending September 9th, total equity mutual funds put up net outflows of -$3.2 billion, trailing the year-to-date weekly average outflow of -$273 million and the 2014 average inflow of +$620 million. The outflow was composed of international stock fund withdrawals of -$237 million and domestic stock fund withdrawals of -$3.0 billion. International equity funds have had positive flows in 46 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 +$551 million and the 2014 average inflow of +$926 million. The outflow was composed of tax-free or municipal bond funds withdrawals of -$191 million and taxable bond funds withdrawals of -$2.2 billion.


Equity ETFs had net redemptions of -$14.7 billion, trailing the year-to-date weekly average inflow of +$1.5 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net inflows of +$3.3 billion, outpacing the year-to-date weekly average inflow of +$1.1 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 | The Best Offense is a Good Defense - ICI2


Fund Flows | The Best Offense is a Good Defense - ICI3


Fund Flows | The Best Offense is a Good Defense - ICI4


Fund Flows | The Best Offense is a Good Defense - ICI5


Fund Flows | The Best Offense is a Good Defense - 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.

 

Fund Flows | The Best Offense is a Good Defense - ICI12


Fund Flows | The Best Offense is a Good Defense - ICI13


Fund Flows | The Best Offense is a Good Defense - ICI14


Fund Flows | The Best Offense is a Good Defense - ICI15


Fund Flows | The Best Offense is a Good Defense - 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:


Fund Flows | The Best Offense is a Good Defense - ICI7


Fund Flows | The Best Offense is a Good Defense - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In a defensive move, investors withdrew -$10.1 billion or -5% from the S&P 500 SPY ETF and contributed +$255 million or +4% to the long treasury TLT.


Fund Flows | The Best Offense is a Good Defense - 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.


Fund Flows | The Best Offense is a Good Defense - ICI17


Fund Flows | The Best Offense is a Good Defense - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$18.7 billion spread for the week (-$17.9 billion of total equity outflow net of the +$854 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 +$1.6 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 -$18.7 billion (negative numbers imply more positive money flow to bonds for the week.)

Fund Flows | The Best Offense is a Good Defense - 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 | The Best Offense is a Good Defense - ICI11 



Jonathan Casteleyn, CFA, CMT 

203-562-6500 

jcasteleyn@hedgeye.com 


Joshua Steiner, CFA

203-562-6500

jsteiner@hedgeye.com