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Takeaway: Re-risking continued in high yield this week with a +$1.6 billion subscription, the third straight week of rebound.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

Re-risking continued in high yield this week with a +$1.6 billion subscription, the third straight week of rebound which has tallied +$6.6 billion. Either U.S. high yield is a great buy currently still sitting at depressed levels or U.S. equities should be put out for sale. Historically there is a close directional relationship between stocks and non-investment grade bonds and with the substantial divergence which has unfolded since 2013, something has to give. Below we plot, U.S. high yield fund flows (orange line) which are still in a downtrend within a 5 week moving average, the high yield ETF, the JNK (in green), and the S&P 500 in magenta.

ICI Fund Flow Survey | Something Has To Give - Some thing has to give

In the 5-day period ending March 9th, total equity ETFs and mutual funds experienced a +$5.1 billion inflow, the equity category's largest inflow so far in 2016. The total equity subscription was mostly comprised of +$3.6 billion to equity ETFs with investors depositing +$1.7 billion to international equity mutual funds. Domestic equity funds continue to bleed out however with -$235 million reigned in by investors.

ICI Fund Flow Survey | Something Has To Give - ICI19

 

In the most recent 5-day period ending March 9th, total equity mutual funds put up net inflows of +$1.5 billion, outpacing the year-to-date weekly average outflow of -$123 million and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net inflows of +$5.9 billion, outpacing the year-to-date weekly average inflow of +$380 million and the 2015 average outflow of -$475 million.

 

Equity ETFs had net subscriptions of +$3.6 billion, outpacing the year-to-date weekly average outflow of -$3.2 billion and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$1.7 billion, trailing the year-to-date weekly average inflow of +$2.3 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:

 

ICI Fund Flow Survey | Something Has To Give - ICI2

 

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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 | Something Has To Give - ICI12

 

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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:

 

ICI Fund Flow Survey | Something Has To Give - ICI7

 

ICI Fund Flow Survey | Something Has To Give - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors contributed +4% or +$396 million to the consumer staples XLP ETF.

 

ICI Fund Flow Survey | Something Has To Give - 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 | Something Has To Give - ICI17

 

ICI Fund Flow Survey | Something Has To Give - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$2.5 billion spread for the week (+$5.1 billion of total equity inflow net of the +$7.6 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 -$34 million (negative numbers imply more positive money flow to bonds for the week) 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.)

ICI Fund Flow Survey | Something Has To Give - 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 | Something Has To Give - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 

 

Joshua Steiner, CFA