February 20, 2019

Mutual Funds Attract Net New Money in January, While ETFs Suffer Net Redemptions

by Tom Roseen.

Photo Source: REUTERS/Leah Millis

For the second month in three, investors were net purchasers of mutual fund assets, injecting $36.9 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for January. Investors warmed to improved trade talks between the U.S. and China and more dovish Federal Reserve Board comments, pushing U.S. stocks to their best January returns in three decades. For the first month in a four, the fixed income funds macro-group witnessed net inflows, taking in $15.1 billion for the month. And for the first month in nine, stock & mixed-asset funds witnessed net inflows (+$14.1 billion) for January, their largest monthly net inflows since March 2015. Money market funds (+$7.7 billion), for their fourth consecutive month of inflows, took in the smallest net inflows of the three broad-based macro-groups in the open-end fund universe.

For the first month in seven, ETFs overall witnessed net outflows, handing back $2.6 billion for January—their largest monthly net outflows since March 2018. Authorized participants (APs, those investors who actually create and redeem ETF shares) were net redeemers of stock & mixed-asset ETFs, removing $18.8 billion from equity ETF coffers. And for the third consecutive month, they were net purchasers of bond ETFs—injecting $16.2 billion for January. APs were net sellers of three of the five equity-based ETF macro-classifications—USDE ETFs (-$18.5 billion), Sector Equity ETFs (-$6.9 billion), and Mixed-Asset ETFs (-$738 million), while being net purchasers of World Equity ETFs (+$5.3 billion) and Alternatives ETFs (+$2.1 billion). In this segment, I highlight the December fund-flows results for both types of investment vehicles.

Highlights:

  • For the second month in three, mutual fund investors were net purchasers of fund assets, injecting $36.9 billion into the conventional funds business for January.
  • For the first month in four, fixed income funds (+$15.1 billion for January) witnessed net inflows, while for the first month in nine, investors were net purchasers of stock & mixed-asset funds (+$14.1 billion). Money market funds (+$7.7 billion) witnessed the smallest net inflows for the month.
  • For the first month seven, authorized participants (APs) were net redeemers of ETFs, withdrawing $2.6 billion for January. APs were net redeemers of stock & mixed-asset ETFs (-$18.8 billion), but net purchasers of fixed income ETFs (+$16.2 billion).
  • For the first month in ten, APs were net redeemers of U.S. Diversified Equity ETFs (-$18.5 billion for January).

Click here to download the January 2019 FundFlows Insight Report: Mutual Funds Attract Net New Money in January, While ETFs Suffer Net Redemptions.

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