• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: Defensive bond flows continued to outpace equity by $8.3 B last week, although slightly less than $12.3 B in the prior week.

Editor's Note: Below is a complimentary research note originally published May 26, 2016 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:

Fund flows in the 5-day period ending May 18th were directionally the same as the prior week as investors continued to make defensive allocations, although the spread between bond and equity flows eased somewhat with bond flows outpacing equity by $8.3 billion, slightly less than $12.3 billion in the previous week. Leading this defensive trend over the past 15 weeks has been the price of Federated Investors stock (FII). As the leading public money fund manager in money funds and other short term fixed income instruments, Federated benefits from defensive allocatoins, and its stock price has risen +31% since February 1st and is up +13% year-to-date before a solid +3% dividend yield. Federated Investors has been a Best Ideas long since December 2014 and remains on our top ideas list in Financials.

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI1 2 normal 6 1

All domestic equity categories continued to bleed last week, losing -$2.0 billion. Equity ETFs also continued their string of losses with -$2.0 billion in outflows. Meanwhile international equity mutual funds took in +$844 million. In fixed income, investment grade, other, and tax-free bond funds all continued last week's inflows, taking in +$2.6 billion, +$1.6 billion, and +$2.2 billion respectively. Additionally, fixed income ETF flows accelerated to +$1.5 billion. Meanwhile, high yield and global bond funds lost -$695 million and -$2.0 billion respectively. Finally, investors shored up +$4 billion of cash in money funds last week.


[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI19

 

In the most recent 5-day period ending May 18th, total equity mutual funds put up net outflows of -$1.2 billion, outpacing the year-to-date weekly average outflow of -$2.1 billion and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net inflows of +$3.7 billion, outpacing the year-to-date weekly average inflow of +$2.4 billion and the 2015 average outflow of -$475 million.

 

Equity ETFs had net redemptions of -$2.0 billion, trailing the year-to-date weekly average outflow of -$1.4 billion and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$1.5 billion, trailing the year-to-date weekly average inflow of +$1.6 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:

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI2

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI3

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI4

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI5

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - 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 | In Federated (Investors) We Trust - ICI12

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI13

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI14


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:

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI7

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors pulled -$568 million or -4% from the health care XLV ETF.

 

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - ICI9


Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$8.3 billion spread for the week (-$3.1 billion of total equity outflow net of the +$5.2 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 -$1.7 billion (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.)

[UNLOCKED] Fund Flow Survey | In Federated (Investors) We Trust - 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 | In Federated (Investors) We Trust - ICI11