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[UNLOCKED] Fund Flow Survey | Bear Tracks

Takeaway: Both equity ETFs and stock mutual funds are having a bad 2016 with investors only subscribing to fixed income via passives and actives.

Editor's Note: Below is a complimentary research note originally published July 7, 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:

In the 5-day period ending June 29th, equity ETFs experienced a net withdrawal of -$12.1 billion, the second largest drawdown so far in 2016. The running year-to-date tally for stock ETFs is now a -$31.6 billion redemption so far in 2016, which would be the worst year on record for the category through the beginning of our data set which starts in 2013. Despite the jarring start to the year for passive equity products, active equity mutual funds have lost over twice as much with withdrawals now totaling -$72.8 billion in 2016 in a continuation of the secular move out of active management.

 

Fixed income mutual funds also experienced withdrawals losing -$2.4 billion last week, however, bond products have averaged +$2.2 billion in new funds per week on the active fund side with fixed income ETFs raising +$1.5 billion per week thus far in '16. Finally, defensive investors shored up +$15 billion of cash in money market funds last week as summer risk aversion picked up.


[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI19

 

In the most recent 5-day period ending June 29th, total equity mutual funds put up net outflows of -$5.0 billion, trailing the year-to-date weekly average outflow of -$2.8 billion and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net outflows of -$2.4 billion, trailing the year-to-date weekly average inflow of +$2.3 billion and the 2015 average outflow of -$475 million.

 

Equity ETFs had net redemptions of -$12.1 billion, trailing the year-to-date weekly average outflow of -$1.2 billion and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$2.0 billion, outpacing the year-to-date weekly average inflow of +$1.6 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:

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI2

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI3

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI4

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI5

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - 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 | Bear Tracks - ICI12

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI13

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI14

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI15

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - 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 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 | Bear Tracks - ICI7

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors pulled -5% or -$130 million from the materials XLB ETF while contributing +5% or +$404 million to the utilities XLU.

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - 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 | Bear Tracks - ICI17

 

[UNLOCKED] Fund Flow Survey | Bear Tracks - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$16.7 billion spread for the week (-$17.1 billion of total equity outflow net of the -$377 million 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 -$3.0 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 | Bear Tracks - 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 | Bear Tracks - ICI11


Daily Market Data Dump: Wednesday

Takeaway: A closer look at global macro market developments.

Editor's Note: Below are complimentary charts highlighting global equity market developments, S&P 500 sector performance, volume on U.S. stock exchanges, rates and bond spreads, and key currency crosses. It's on the house. For more information on how Hedgeye can help you better understand the markets and economy (and stay ahead of consensus) check out our array of investing products

 

CLICK TO ENLARGE

 

Daily Market Data Dump: Wednesday - equity markets 7 13

 

Daily Market Data Dump: Wednesday - sector performance 7 13

 

Daily Market Data Dump: Wednesday - volume 7 13

 

Daily Market Data Dump: Wednesday - rates and spreads 7 13

 

Daily Market Data Dump: Wednesday - currencies 7 13


CHART OF THE DAY: Healthcare Investors, This Will Be A Jarring Experience

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye Managing Director Tom Tobin. Click here to learn more.

 

"... The US Medical economy is currently in very good shape, particularly for providers and investors. During the healthcare crisis 20 years ago Matt Damon played Rudy in “Rainmaker,” a not-quite Jason Bourne hero fighting an evil health insurance company, so maybe we’ve travelled some distance. But as we will detail tomorrow in our Healthcare Themes call, we think we are going back to normal for investors and providers.

 

In 2016, growth in insured medical consumers will slow, the country will go back to hating insurance companies, continue to pay even higher premiums and deductibles, creating more medical debt, with more political “crisis-mongering,” and a general re-awakening to the reality that affordability for individuals, state and federal government, employers, providers and insurers is still out of reach. For the investor class this will be a jarring experience for those that are unprepared."

 

CHART OF THE DAY: Healthcare Investors, This Will Be A Jarring Experience - 20160701 InsuredPopulation


Early Look

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Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

Trouble Ahead In Europe? Keep An Eye On Credit Default Swaps

Takeaway: Europe financials' CDS have been widening all of 2016 despite the episodic hope that ECB stimulus (see March declines) will prove a panacea.

Trouble Ahead In Europe? Keep An Eye On Credit Default Swaps - european cds

 

Even as financial markets swoon over Italian bank bailout hopes, a number of European financials' credit default swaps remain elevated versus where they were at start of this year. Make no mistake, the chart above is yet another example of the central planning #BeliefSystem breaking down.

 

Can the ECB save Europe's troubled banks?

 

Probably not.


Cartoon of the Day: Central Banking 101

 

Cartoon of the Day: Central Banking 101 - negative interest rates cartoon 07.12.2016

 

According to the Fiscal Times:

 

"Japan's household sentiment soured and inflation expectations hit the lowest since the Bank of Japan adopted its massive stimulus program in 2013, a quarterly central bank survey showed... The ratio of households who said they trusted the Bank of Japan's policy management also hit a seven-year low, with more than half of the respondents doubting whether it was independent from government interference, the survey showed."


Is Income Inequality Depressing Demand?

In this excerpt from The Macro Show this morning, Hedgeye Demography Sector Head  Neil Howe answers a subscriber’s question on how whether income inequality in the U.S. is depressing aggregate demand.


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