[UNLOCKED] Fund Flow Survey | Stock Funds Bleeding...Bonds Funds Booming

Investment Company Institute Mutual Fund Data and ETF Money Flow:

In the 5-day period ending September 28th, mutual fund trends maintained their trajectory with substantial outflows in stock funds and continued defensive re-allocation into bonds. Domestic equity funds continued to hemorrhage, losing another -$2.3 billion and contributing to total equity mutual fund losses of -$4.6 billion. The running year-to-date redemption in domestic stock funds crossed -$150 billion this week, the worst 39 week period in the history of the ICI data.  This trend played out operationally during the past 5 days with the defensive, cost driven merger of equals between Janus and Henderson in the U.K. (with di minimus value created for JNS shareholders). Meanwhile, all bond mutual funds except the global category saw net inflows, bringing total fixed income flow to +$5.0 billion. Within passives, equity funds had a solid week bringing in +$7.4 billion of new subscriptions, well above the 2016 weekly average of +$369 million. Bond ETFs netted +$2.6 billion in fresh capital, also above the 2016 weekly average of +$1.5 billion (and conversely having their best 39 week period in history netting over +$60 billion in year-to-date subscriptions). Finally, investors shored up +$11 billion of cash in money funds.

 

In the most recent 5-day period ending September 28th, total equity mutual funds put up net outflows of -$4.6 billion, trailing the year-to-date weekly average outflow of -$4.1 billion and the 2015 average outflow of -$1.5 billion.

 

Fixed income mutual funds put up net inflows of +$5.0 billion, outpacing the year-to-date weekly average inflow of +$3.1 billion and the 2015 average outflow of -$471 million.

 

Equity ETFs had net subscriptions of +$7.4 billion, outpacing the year-to-date weekly average inflow of +$369 million and the 2015 average inflow of +$2.8 billion. Fixed income ETFs had net inflows of +$2.6 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:

 

 

 

 

 

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.

 

 

 

 

 

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:

 

 

Sector and Asset Class Weekly ETF and Year-to-Date Results: In sector SPDR callouts, investors pulled -8% or -$591 million from the long-duration treasuries TLT ETF while contributing +7% or +$194 million to the materials XLB ETF.

 

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.

 

 

Net Results:

The net of total equity mutual fund and ETF flows against total bond mutual fund and ETF flows totaled a negative -$4.8 billion spread for the week (+$2.8 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 -$5.9 billion (negative numbers imply more positive money flow to bonds for the week) with a 52-week high of +$11.0 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.)

 

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:

 

 

Editor's Note

This is a complimentary research note originally published last week by our Financials team. For more info on our institutional research email sales@hedgeye.com.