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Takeaway: All equity categories experienced withdrawals last week while investors sought shelter in IG fixed income and municipal bonds.

Editor's Note: This is a complimentary research note originally published April 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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Emerging market equities put up their 5th consecutive week of outflow with a cumulative -$2.3 billion having come out of the category since the week ending March 16th. While EM received some fanfare as a "generational buying opportunity" in mid-February, equity prices and flows haven't broken their down trend and are in again in retreat. Importantly, the recent +20% rally in the MSCI index is not uncharacteristic as there have been eight 20%+ (short covering) rallies in the 4 year price action starting in 2011.

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Investment Company Institute Mutual Fund Data and ETF Money Flow:

Investors pulled funds from all equity categories last week with both funds and ETFs experiencing redemptions totaling -$4.7 billion. Additionally, high yield and global fixed income lost -$419 million and -$820 million respectively while investors sought shelter in investment grade and municipal bonds; IG fixed income took in +$2.1 billion with municipal bonds collecting +$910 million. Finally, money market funds lost another -$8 billion to outflows, as tax season finished up during the week.


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In the most recent 5-day period ending April 13th, total equity mutual funds put up net outflows of -$4.6 billion, trailing the year-to-date weekly average outflow of -$1.4 billion and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net inflows of +$2.8 billion, outpacing the year-to-date weekly average inflow of +$1.6 billion and the 2015 average outflow of -$475 million.

 

Equity ETFs had net redemptions of -$75 million, outpacing the year-to-date weekly average outflow of -$957 million but trailing the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$493 million, trailing the year-to-date weekly average inflow of +$1.9 billion and 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:

 

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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.

 

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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:

 

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Sector and Asset Class Weekly ETF and Year-to-Date Results: While ETF flows were fairly mild last week, the long duration treasury TLT saw the largest percentage flow; investors pulled -2% or -$211 million from the fund.

 

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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.

 

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Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$8.0 billion spread for the week (-$4.7 billion of total equity outflow net of the +$3.3 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 -$746 million (negative numbers imply more positive money flow to bonds for the week) with a 52-week high of +$20.2 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.)

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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:

 

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