June 22, 2018

Equity Funds and Taxable Bond Funds Attract the Most Net New Money for First Half 2018

by Patrick Keon.

As we near the end of the second quarter we thought it would be interesting to take a look back to see what investors in the funds space (including both mutual funds and ETFs) were doing with their money. The favorite asset class for the investing public for first half 2018 was the equity funds group, which took in just shy of $84 billion of net new money. Taxable bond funds, with positive net flows of $80.4 billion, were not far behind. Municipal debt funds, with net inflows of $6.9 billion, were also on the plus side of the ledger, while money market funds were the only asset class seeing money leave, suffering net-negative flows of $47.2 billion for the year to date. The money market group saw year-to-date net inflows turn into relatively sizeable net outflows in just one week; the group had net-negative flows of just over $51 billion for Thomson Reuters Lipper’s fund-flows week ended Wednesday, June 20. This represented the money market fund group’s seventh largest net outflows of all time and its largest since 2011. These net outflows were a function of U.S. corporations withdrawing cash to pay their quarterly tax bill and investors settling their accounts from the previous week’s Treasury auction.

Comparing data from the same time last year showed that the trends from first half 2017 still hold today: the most significant net inflows belonged to the taxable bond and equity groups, with muni debt funds also recording positive net flows, while investors were pulling money from the money market funds group. The numbers were slightly different for taxable bond funds and equity funds this year. Last year taxable bond funds (+$162.3 billion) had higher net inflows than did equity funds (+$125.1 billion), and both groups’ overall net inflows for 2018 lagged their 2017 numbers. At this time last year the fund universe had experienced total net inflows of $202.4 billion, while that number was somewhat more muted this year, with positive net flows of $124.1 billion.

At the peer group level the most significant net inflows for equity funds during first half 2018 belonged to Lipper’s International Multi-Cap Core Funds (+$47.4 billion) and Multi-Cap Core Funds (+$21.3 billion) classifications, while Core Bond Funds (+$33.8 billion) paced all the taxable bond fund classifications. International Multi-Cap Core Funds (+$35.0 billion) and Core Bond Funds (+$16.8 billion) also led their respective asset groups at the halfway point of 2017.

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