[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds

Takeaway: In the week before the Fed's first rate hike this cycle, almost all risk asset classes saw withdrawals.

Editor's Note: This is a complimentary research note which was originally published December 17, 2015 by our Financials team. If you would like more info on how you can access our institutional research please email sales@hedgeye.com.

 

 

Investment Company Institute Mutual Fund Data and ETF Money Flow:

Almost all risk asset classes experienced net withdrawals in the 5-day period ending December 9th while investors shored up +$13 billion of cash in money market funds, the 8th inflow into cash products in the past 10 weeks aggregating over $85 billion. Other than money markets, only equity ETFs and municipal bond funds saw net positive flows with equity ETFs taking in +$4.1 billion and muni bond funds collecting +$825 million during the week. Meanwhile, taxable bond funds lost -$7.3 billion, their largest outflow of the quarter, on fears of high yield credit exposure. Domestic equity mutual funds lost another -$5.2 billion, bringing the YTD cumulative flow to -$160.2 billion.

 

With 30-40 day duration in most of their money fund portfolios, Federated Investors will now be able to add roughly 6 cents per quarter in new earnings starting in the middle of 1Q16 as new benchmark rates filter through the system (see our FII report).

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI1 large 12 23

 

In the most recent 5-day period ending December 9th, total equity mutual funds put up net outflows of -$6.4 billion, trailing the year-to-date weekly average outflow of -$1.1 billion and the 2014 average inflow of +$620 million. The outflow was composed of international stock fund withdrawals of -$1.2 billion and domestic stock fund withdrawals of -$5.2 billion. International equity funds have had positive flows in 41 of the last 52 weeks while domestic equity funds have had only 8 weeks of positive flows over the same time period.

 

Fixed income mutual funds put up net outflows of -$6.5 billion, trailing the year-to-date weekly average outflow of -$58 million and the 2014 average inflow of +$926 million. The outflow was composed of tax-free or municipal bond funds contributions of +$825 million and taxable bond funds withdrawals of -$7.3 billion.

 

Equity ETFs had net subscriptions of +$4.1 billion, outpacing the year-to-date weekly average inflow of +$2.4 billion and the 2014 average inflow of +$3.2 billion. Fixed income ETFs had net outflows of -$39 million, trailing 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:

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI2

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI3

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI4

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI5

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money 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.

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI12

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI13 2

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI14

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI15

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money 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:

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI7

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors withdrew -5% or -$306 million from the long treasury TLT ETF ahead of the Fed's first rate hike in seven years. Additionally, the industrials XLI also lost -5% or -$315 million.

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money 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.

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - ICI17

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money 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 +$4.1 billion spread for the week (-$2.4 billion of total equity outflow net of the -$6.5 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 +$858 million (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.)

  

[UNLOCKED] Fund Flow Survey | Bull Market in Money 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:

 

[UNLOCKED] Fund Flow Survey | Bull Market in Money Funds - 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