Year-to-date flows into equity funds (including both conventional funds and ETFs) through December 15 have totaled $346.2 billion. After recording their worst year on record in 2020 (-$374.7 billion), equity funds are poised to set a record for calendar year inflows as well as snapping a three-year stretch of calendar year outflows. Fixed income funds (including both conventional funds and ETFs) are on pace to record their third straight year of inflows. Similar to equity funds, fixed income funds will also post a new calendar year record—preliminary year-to-date flows through December 15 are $554.8 billion.
Looking at weekly flows throughout 2021, there were persistent inflows for both equity and fixed income funds. The average weekly flow for each was $3.7 billion and $6.3 billion, respectively. Fixed income funds (including taxable and tax-exempt) only suffered three total weeks of outflows—municipal bond funds recorded only one week of outflows all year. Since 1992, both equity (-$5.7 billion) and fixed income (-$2.3 billion) average their lowest net flows in December. Year-end has always been a popular time for market participants to rebalance portfolios for tax, income, and risk considerations, and 2021 appears to be no different. So far, month-to-date flows for equity funds are negative $2.8 billion, which will most likely lead to only their third month reporting outflows. Fixed income funds are on track to log their lowest monthly inflows of the year (+$3.8 billion, preliminary month-to-date). Money market funds are reaping some of those inflows, month to date $13.1 billion is already greater than 2020’s December total of $10.5 billion.
Fixed income funds this year have been led by the Lipper Core Bond Funds classification (+$130.0 billion) and Lipper Inflation Protected Bond Funds classification (+$69.2 billion). On the other end of the spectrum, corporate debt funds were hit hard, especially lower-quality issues—Lipper High Yield Funds (-$21.1 billion) and Lipper Corporate Debt Funds BBB-Rated (-$8.6 billion) are logging the largest total outflows so far this year.
The leading classifications for year-to-date inflows so far for equity funds are Lipper S&P 500 Index Funds (+$81.7 billion) and Lipper Emerging Markets Funds (+$44.0 billion). Lipper Emerging Markets Funds are trending down, however, and this past week they recorded $3.6 billion in total outflows—the classification’s fourth-largest weekly outflow to date. The three Lipper classifications to draw the most outflows this year for Equity fund classifications are Lipper Large-Cap Growth (-$56.9 billion), Lipper Multi-Cap Growth (-$19.4 billion), and Lipper Mid-Cap Growth (-$16.9 billion).
Looking at the style matrix breakdown for our U.S. Holdings-Based Classification equity funds, large-cap mutual funds took it on the chin, recording $127.5 billion in outflows year-to-date through December 15. Growth mutual funds especially saw large outflows (-$131.5 billion).
U.S. HBC equity ETFs saw strong inflows all year—witnessing $208.8 billion in inflows. Lipper Multi-Cap Core Funds realized the largest investor interest, posting $50.4 billion in year-to-date flows so far. Value and Core funds overall have been the largest attractors of new money this year, observing inflows of $32.2 billion and $45.1 billion, respectively.
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