ICI Fund Flow Survey | The Trillion Dollar Bet

Takeaway: Investors contributed to both risk asset classes last week but contributed more to bonds than equities, favoring measured risk.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

Risk assets rebounded across the board in the 5-day period ending October 21st, signaling a temporary reduced level of worry in the marketplace. However, the +$6.0 billion net flow into total bond products (both mutual funds and ETFs) outpaced the +$3.3 billion inflow into total equity products, as investors still favored the relative safety of bonds over stocks. Only domestic equity mutual funds and hybrid mutual funds experienced redemptions last week with all other categories seeing new subscriptions as investors looked again to put money to work.

 

Additionally, money funds continued to rebuild balances, gaining another +$1 billion in contributions last week, bringing the 4Q15 total inflow to +$30 billion. This trend supports our Long recommendation on leading money fund manager Federated Investors (see our FII report). The long running equity bull market has been sourced by money coming off the sidelines and out of money funds which is why a late stage setup in equities should unwind the constant 6 year draw down in cash products. While cash balances in 3Q15 and 4Q15TD have started their seasonal rebuild with +$54 billion and +$30 billion moving back into the category, we note the substantial run in the S&P 500 has resulted in 20 out of 36 quarterly outflows in industry related cash products, with over $1.1 trillion being redeemed. As equities enter 2016 and beyond and into the late stages of this current economic expansion, this is the opportunity for leading money fund managers including Federated, BlackRock, and Legg Mason.

 

ICI Fund Flow Survey | The Trillion Dollar Bet - z chart1

 

In the most recent 5-day period ending October 21st, total equity mutual funds put up net inflows of +$1.5 billion, outpacing the year-to-date weekly average outflow of -$357 million and the 2014 average inflow of +$620 million. The inflow was composed of international stock fund contributions of +$1.6 billion and domestic stock fund withdrawals of -$70 million. 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 inflows of +$3.1 billion, outpacing the year-to-date weekly average inflow of +$113 million and the 2014 average inflow of +$926 million. The inflow was composed of tax-free or municipal bond funds contributions of +$405 million and taxable bond funds contributions of +$2.7 billion.

 

Equity ETFs had net subscriptions of +$3.3 billion, outpacing the year-to-date weekly average inflow of +$1.9 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net inflows of +$2.8 billion, outpacing the year-to-date weekly average inflow of +$1.2 billion and the 2014 average inflow of +$1.0 billion.

 

ICI Fund Flow Survey | The Trillion Dollar Bet - z black red

 

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 | The Trillion Dollar Bet - ICI2

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI3

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI4

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI5

 

ICI Fund Flow Survey | The Trillion Dollar Bet - 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 | The Trillion Dollar Bet - ICI12

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI13

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI14

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI15

 


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 | The Trillion Dollar Bet - ICI7

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors redeemed -$420 million or -5% from the industrials XLI ETF while contributing +$436 million or +4% to the energy XLE.

 

ICI Fund Flow Survey | The Trillion Dollar Bet - ICI9



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$1.2 billion spread for the week (+$4.8 billion of total equity inflow net of the +$6.0 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 +$1.6 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 -$19.0 billion (negative numbers imply more positive money flow to bonds for the week.)

  

ICI Fund Flow Survey | The Trillion Dollar Bet - 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 | The Trillion Dollar Bet - ICI11 


Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more