Third Quarter Fund Flow Results Show a Continuation of Long-Term Trends

The third quarter net fund flows for Lipper’s fund asset groups (including both mutual funds and ETFs) continued the trends that we’ve seen for the year to date. Money market funds paced the net inflows among the fund asset groups for Q3 with an increase of $221.5 billion, which grew its year-to-date intake to $349.7 billion. Taxable bond funds (+$49.1 billion) and municipal bond funds (+$22.1 billion) also took in net new money in the third quarter. These gains pushed the net positive flows for the taxable and tax-exempt bond groups to $197.5 billion and $69.1 billion, respectively, for the year to date. Equity funds were the only asset group to suffer net outflows for Q3 (-$72.8 billion) and the year to date (-$125.6 billion). The combined data shows that funds took in $219.7 billion in the third quarter and $490.6 billion for the first three quarters of the year.

Money market funds have not seen this level of net inflows since the global financial crisis. The group’s net inflow for Q3 is its fourth highest ever (Lipper began tracking this data in 1992), trailing only the three consecutive quarters at the start of the crisis—Q3 2007 (+$319.4 billion), Q4 2007 (+$272.4 billion), and Q1 2008 (+$347.7 billion).

The net positive flows for taxable bond funds in the third quarter were relatively evenly split between mutual funds (+$26.3 billion) and ETFs (+$22.8 billion). The largest net inflows among the taxable bond fund peer groups for the quarter (including both mutual funds and ETFs) belonged to Core Bond Funds (+$14.2 billion) and Core Plus Bond Funds (+$13.4 billion).

Muni debt funds stretched their streak of consecutive weekly net inflows to 39 by the end of the third quarter. The asset group is on pace to surpass its largest annual net inflow ever of $81.1 billion in 2009. The national muni debt peer groups have dominated the net inflows for the third quarter, accounting for $19.2 billion of the total $22.1 billion net inflows. The net positive flows have been paced by General Muni Debt Funds (+$7.2 billion), High Yield Muni Debt Funds (+$4.9 billion), and Intermediate Muni Debt Funds (+$4.3 billion) peer groups.

The quarterly (as well as the year to date) fund flow results for equity funds show a tale of two cities. Equity mutual funds have been responsible for all of the net outflows during both Q3 (-$84.9 billion) and the first three quarters of the year (-$157.2 billion), while equity ETFs have taken in net new money for both time periods (+$12.1 billion in Q3 and +$31.5 billion for the year to date). The hardest hit peer groups among the equity mutual funds for Q3 were Large-Cap Growth Funds (-$16.0 billion) and Large-Cap Value Funds (-$8.6 billion). For equity ETFs, the Multi-Cap Core Funds peer group took in $12.0 billion in net new money during the quarter.