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Despite the U.S. stock market’s swoon in the wake of the presidential election, investors showed they remain willing to invest in equity funds, although Lipper’s most recent data suggests they continue to favor ETFs.
The week ended Wednesday, November 7, included the worst single-day decline the Dow Jones Industrial Average has experienced this year, as the blue-chip benchmark plunged 312.95 points on the final day of that period after President Barack Obama secured a second term in the White House. Nonetheless, investors seemed undaunted by the nervous market heading into the election or the post-election selloff, as they continued to direct inflows into equity mutual funds and exchange-traded funds, according to data released late yesterday by Lipper.
Regardless of whether the market’s nosedive was due to the president’s re-election, to renewed anxiety about the looming fiscal cliff (particularly given the fact that there was little real change to the makeup of the gridlocked Congress) or to fresh fears about what lies in store for the Eurozone – or some toxic combination of all three – the fund flows data suggests that investors responded by combining ‘risk on’ and ‘risk off’ strategies. While they contributed some $4 billion to equity ETFs, and injected another $900 million into equity mutual funds, they also showed a clear interest in low-yielding but low-risk money market funds, which attracted $31.1 billion of net inflows during the week.
Despite the market’s weak performance during the week ended November 7, investors injected nearly $43 billion of net new capital into all of Lipper’s major macro-classifications during the week. Taxable bond funds pulled in $6.1 billion, while municipal bond funds attracted $900 million of new capital.
Within the equity ETF universe, three funds continue to dominate the landscape and account for the majority of inflows: the iShares: Core S&P Midcap, which attracted $1.1 billion in the just-ended week, the SPDR S&P 500, which pulled in some $800 million, and the Financial Select Sector SPDR, which saw inflows of $600 million during the period.
Still, not all was rosy in the equity funds world. While overall stock mutual funds reported inflows of $900 million, that was due to investor interest in non-domestic investments: it seems that investors who are willing to put money to work in U.S. equities prefer to turn to ETFs such as those noted above. U.S. equity mutual funds reported net redemptions of $640 million during the week ended November 7, while non-U.S. mutual funds said they attracted $1.6 billion of net new assets.
For more information on this week’s fund flows data, please refer to Lipper’s fund flows database or view this video.
