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November 14, 2014

LIPPER FUND FLOWS: WIDE DIVIDE BETWEEN RETAIL AND INSTITUTIONAL INVESTORS

by Lipper Alpha Insight.

November 14, 2014 by Jeff Tjornehoj

A string of good economic indicators helped send both the S&P 500 and the Dow Jones Industrial Average to record highs this past week. Late in the flows week ended November 12, it was reported that the unemployment rate for October declined from 5.9% to 5.8%—a six-year low. But across the pond, the European Central Bank cut its growth outlook and warned that inflation could rise. Going even further east, the Chinese government reported industrial production grew 7.7% so far this year, far less than the expected 8.0% growth.

REUTERS/Yuriko Nakao

REUTERS/Yuriko Nakao

But investors’ opinions diverged on what it all meant, and retail investors pulled a net $1.9 billion from their equity accounts for the week, while institutional investors added a net $12.6 billion to equity exchange-traded funds (ETFs). (It was the second week in a row that institutions pumped more than $10 billion into ETFs.) The week’s biggest net inflows recipients were SPDR S&P 500 (SPY, +$5.6 billion) and iShares Core S&P 500 (IWV, +$824 million), while investors pulled more assets from SPDR Gold (GLD, -$492 million).

Taxable bond mutual fund investors kept the pedal firmly pressed, adding a net $3.8 billion to their accounts. Mutual funds in Lipper’s High Yield Funds classification had a fourth straight week of net inflows (+$796 million), while Loan Participation Funds had outflows of $366 million—for an eighteenth straight week of net outflows. The week’s top destination for bond ETFs was First Trust Enhanced Short Maturity ETF (FTSM), with net inflows of $1.0 billion (huge activity for this formerly ignored product). Municipal bond mutual fund investors added a net $513 million to their accounts, despite a fourth week of weak performance. Money market funds saw net inflows of $4.6 billion, of which institutional investors added $9.3 billion and retail investors pulled $4.7 billion.

For more information on this week’s Lipper fund flows data, please refer to Lipper’s U.S. Fund Flows website or this video:

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