by Pat Keon, CFA.
Refinitiv Lipper’s fund asset groups (including both mutual funds and ETFs) experienced net outflows of $4.7 billion for the fund-flows trading week ended Wednesday, October 14. This week’s results marked the tenth straight overall net negative result for funds. Money market funds (-$18.9 billion) were responsible for all of this week’s net outflows, while taxable bond funds (+$11.2 billion), equity funds (+$2.4 billion), and municipal bond funds (+$614 million) all took in net new money.
The equity indices all recorded gains for the third consecutive fund-flows trading week as the Dow Jones Industrial Average, NASDAQ Composite Index, and S&P 500 Index posted increases of 3.6%, 2.0%, and 0.7%, respectively.
The equity markets recorded all of their gains during the first part of the trading week on renewed optimism that the federal government would soon pass another financial stimulus package. The markets faded in the second half of the week as stimulus talks appeared to have stalled and after news broke that two COVID-19 vaccine trials (Johnson & Johnson and Eli Lilly) were paused due to safety concerns.
ETFs (+$15.6 billion) took in net new money for the third straight week. All three fund asset groups recorded net positive flows led by equity ETFs (+$10.9 billion) and followed by taxable bond (+$4.4 billion) and muni bond (+$192 million) ETFs. Among the equity asset group, the largest individual net inflows belonged to Invesco QQQ ETF (QQQ, +$5.2 billion), iShares Russell 2000 ETF (IWM, +$2.2 billion), and iShares ESG Aware MSCI USA ETF (ESGU, +$1.5 billion). For taxable bond funds, iShares MBS ETF (MBB), iShares iBoxx $ High Yield Corporate Bond ETF (HYG), and iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) led the way with net inflows of $1.1 billion, $989 million, and $527 million, respectively.
Equity Mutual Funds
Equity mutual funds (-$8.6 billion) ran their net negative streak to 25 weeks. Domestic equity funds (-$6.0 billion) were responsible for the bulk of this week’s net outflows, while nondomestic equity funds saw $2.5 billion leave. The most significant net outflows at the peer group level were attributable to Large-Cap Growth Funds (-$1.3 billion) and International Multi-Cap Core Funds (-$593 million). For the year to date, equity mutual funds have had a net exodus of $388.7 billion, which, if it stands, will be its largest annual net outflows ever, significantly outdistancing last year’s net negative result (-$294.0 billion).
Fixed Income Mutual Funds
The taxable bond (+$6.8 billion) and municipal bond (+$423 million) fund groups both took in net new money for the week. For the taxable bond fund peer groups, Core Bond Funds (+$1.9 billion), Core Plus Bond Funds (+$1.4 billion), and High Yield Funds (+$1.3 billion) led the net positive flows. Short Muni Debt Funds (+$299 million) and General Muni Debt Funds (+$150 million) paced the tax-exempt fund groups.
Money Market Mutual Funds
Money market funds (-$18.9 billion) had net outflows for the twelfth straight week. During this time frame, the group has seen more than a quarter of a trillion dollars net leave its coffers, but it is still on the plus side by $687 billion for the year to date. The largest net negative flows in this week’s data belonged to Institutional U.S. Government Money Market Funds (-$9.3 billion) and Institutional U.S. Treasury Money Market Funds (-$6.1 billion).