[UNLOCKED] Fund Flow Survey | Unloading Equity

Editor's Note: This is a complimentary research note which was originally published January 21, 2016 by our Financials team. If you would like more info on how you can access our institutional research please email sales@hedgeye.com.

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Investment Company Institute Mutual Fund Data and ETF Money Flow:

Investors continued to unload equity from their portfolios in the 5 days ending January 13th as markets continued their rout, although active international mandates held up with a +$3.2 billion inflow. Domestic equity, however, continued its losing streak with another -$4.8 billion outflow. Even passive equity ETFs were hit with a -$9.1 billion outflow, -$4.9 billion of which came from the SPY. Fixed income mandates fared slightly better with a total inflow of +$574 million into mutual funds and ETFs, although the preference was for municipal bonds and passive fixed income ETFs. Lastly, investors shored up +$8 billion of cash in money funds during the week.

In the most recent 5-day period ending January 13th, total equity mutual funds put up net outflows of -$1.6 billion, outpacing the year-to-date weekly average outflow of -$2.0 billion but trailing the 2015 average outflow of -$1.5 billion. The outflow was composed of international stock fund contributions of +$3.2 billion and domestic stock fund withdrawals of -$4.8 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 -$526 million, trailing the year-to-date weekly average outflow of -$236 million and the 2015 average outflow of -$463 million. The outflow was composed of tax-free or municipal bond funds contributions of +$1.3 billion and taxable bond funds withdrawals of -$1.8 billion.

Equity ETFs had net redemptions of -$9.1 billion, trailing the year-to-date weekly average outflow of -$9.1 billion and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$1.1 billion, trailing the year-to-date weekly average inflow of +$1.2 billion but outpacing the 2015 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 2015 and the weekly year-to-date average for 2016:

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.

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 2015, and the weekly year-to-date average for 2016. In the third table are the results of the weekly flows into and out of the major market and sector SPDRs:

Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors pulled -$4.9 billion or -3% from the SPY as investors retreated from the broader domestic equity market.

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.

Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$11.3 billion spread for the week (-$10.7 billion of total equity outflow net of the +$574 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 +$578 million (more positive money flow to equities) with a 52-week high of +$20.5 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.)

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: