ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record

Takeaway: In week 37 of 2016, this year's trends in domestic stock funds are ~$40 billion worse than last year and twice as weak as 2008.

Investment Company Institute Mutual Fund Data and ETF Money Flow:

With this week's -$4.5 billion withdrawal from domestic stock mutual funds, the category's losing streak is now the biggest on record at -$323 billion over the past 80 weeks (we define a streak as intact if not offset by 4 weeks of inflows). Through 37 weeks of 2016, this year is setting new outflow records previously set in 2015, with flows in U.S. stock funds -$37 billion worse than last year and shockingly over 2.2x worse than the outflow trends in the first 37 weeks of 2008. With equity markets at all time highs, there is no bigger indication of the secular shift out of the antiquated mutual fund structure (in the equity asset class at this point). Meanwhile, all bond mutual funds except for those with global mandates brought in net subscriptions this week, contributing to total fixed income mutual fund flows of +$6.2 billion. Bond ETFs did not fare as well, however, losing -$2.8 billion. Finally, investors pulled -$29 billion from money market funds.

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI1

Running annual recaps outlining the worst outflow on record for 2016:

<chart20>

In the most recent 5-day period ending September 7th, total equity mutual funds put up net outflows of -$6.1 billion, trailing the year-to-date weekly average outflow of -$4.1 billion and the 2015 average outflow of -$1.6 billion.

 

Fixed income mutual funds put up net inflows of +$6.2 billion, outpacing the year-to-date weekly average inflow of +$3.1 billion and the 2015 average outflow of -$475 million.

 

Equity ETFs had net redemptions of -$770 million, trailing the year-to-date weekly average inflow of +$309 million and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net outflows of -$2.8 billion, trailing the year-to-date weekly average inflow of +$1.6 billion and the 2015 average inflow of +$1.0 billion.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI19

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 | Domestic Stock Funds Printing the Worst Year on Record - ICI2

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI3

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI4

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI5

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - 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.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI12

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI13

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI14

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI15

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - 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:

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI7

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI8



Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors redeemed -3% or -$206 million from the utilities XLU ETF and -3% or -$222 million from the long duration treasury TLT ETF.

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - 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 | Domestic Stock Funds Printing the Worst Year on Record - ICI17

 

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - ICI18



Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$10.3 billion spread for the week (-$6.8 billion of total equity outflow net of the +$3.4 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 -$5.0 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 -$18.4 billion (negative numbers imply more positive money flow to bonds for the week.)

ICI Fund Flow Survey | Domestic Stock Funds Printing the Worst Year on Record - 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 | Domestic Stock Funds Printing the Worst Year on Record - ICI11 



Jonathan Casteleyn, CFA, CMT 

 

 

 

Joshua Steiner, CFA

 

Patrick Staudt, CFA