Investors appear reluctant to own higher-risk investments, but on the margin are also exiting money market funds that can’t offer much in the way of yield, the most recent data from Lipper reveals.
The bumpy end to the third-quarter seems to have taken a toll on investors’ willingness to own equity mutual funds, as withdrawals from these investments totaled $2.4 billion during the week ended October 4, according to data released late yesterday by Lipper.
That’s the eighth week in a row in which investors have withdrawn assets from equity mutual funds, with U.S. stock funds bearing the brunt of those outflows. Net redemptions in that category hit $2.6 billion during the period, with even Lipper’s Equity Income Funds group – which has tended to remain appealing to investors – reporting outflows for the week, even though that figure was a meager $500,000 or so.
In some recent weeks, equity exchange-traded funds (ETFs) have continued to see inflows even as mutual funds have recorded net redemptions. This week, that pattern changed. After injecting a net $27.8 billion into ETFs over the previous three weeks, ETF investors switched gears, withdrawing $440 million from these investments in the period ended October 4.
Once more, safety seemed to be back in favor. Taxable bond funds reported inflows of $2.4 billion during the period, while the riskier high-yield bond funds witnessed net redemptions of about $400 million on top of a loss of $500 million in assets in the prior week Investors found international and global funds more appealing; that group attracted some $470 million during the period. Tax-exempt municipal bond funds also saw their coffers swell, reporting inflows of about $550 million, extending their streak of uninterrupted inflows to 27 weeks.
Still, risk aversion only goes so far, it seems. Investors still appear reluctant to put more money into money market funds that are offering razor-thin yields in return for those investments. Outflows from money market funds totaled just under $9 billion in the most recent five-day trading period, Lipper reported.
For more information on this week’s fund flows data, please refer to Lipper’s database or this video.
