September 2014 U.S. Fund Flows Summary

In September investors showed amazing resolve in the face of enough geopolitical risk to bring about the oft-called-for but so far elusive 10% technical correction. Warnings of imminent attacks on Western targets by Islamic State jihadists, increasing tensions in Russia/Ukraine, Syria’s civil war, and Hong Kong’s recent democratic protests—while being closely watched—had yet to produce wholesale selloffs in the market.

REUTERS/Eduardo Munoz

For the fifth month in a row investors were net purchasers of fund assets, injecting $17.2 billion into the conventional funds business (excluding ETFs) for September. For the second month in a row money market funds attracted net new money, reeling in $23.7 billion for September. Breaking an eight-month inflow streak, mutual fund investors were net redeemers of fixed income funds, withdrawing $7.2 billion from the macro-group. For the twenty-first consecutive month investors were net purchasers of stock & mixed-asset funds; however, they deposited only $0.7 billion for September (the smallest amount since December 2012).

While many investors commiserated about the increased market volatility in September and attempted to reconcile the recent reports of brutal murders by ISIS, the increasing tensions in Ukraine, calls for sanctions against Russia, Scotland’s vote for independence, and signs of economic contraction in the European Union (all weighing on investors’ tenuous resolve), authorized participants (APs) increased their exposure to equity issues.

For the month APs injected a net $17.5 billion into equity ETFs, while for the first month in four they were net redeemers of bond ETFs—to the tune of $3.1 billion. Nonetheless, the ETF universe witnessed its eighth consecutive month of net inflows, taking in $14.4 billion for September. Despite continued concerns about global growth, only the Sector Equity ETFs and Alternatives ETFs macro-classifications witnessed net redemptions for September (-$0.3 billion and -$0.2 billion, respectively) of Lipper’s five broad-based equity groups. For the third month in four U.S. Diversified Equity (USDE) ETFs witnessed the strongest monthly net inflows of the five equity-related macro-classifications (+$15.6 billion for September, its largest net inflows since October 2013). Following USDE ETFs were World Equity ETFs (+$2.2 billion) and Mixed-Asset ETFs (+$0.2 billion).

If you’d like to read the entire September 2014 FundFlows Insight Report with all its tables and charts, please click here.