May 16, 2019

Despite Steepening Yield Curve, Investors Embrace Bond Funds in April

by Tom Roseen.

Photo Source: Andy Wong/Pool via REUTERS

For the second consecutive month, investors were net redeemers of mutual fund assets, withdrawing $4.0 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below) for April. Investors remained upbeat ahead of the Q1 earnings season and optimistic that the U.S. and China trade talks had made substantial progress during the month. Nonetheless, for the third month in a row, stock & mixed-asset funds witnessed net outflows (-$33.4 billion) for April. Despite the Treasury yield curve steepening at the long-end of the curve for April, the fixed income funds macro-group witnessed net inflows for the fourth month in a row, taking in $41.9 billion (their largest monthly net inflows since January 2018). And for the second month running, money market funds (-$12.5 billion) witnessed net outflows.

For the third month in a row, ETFs overall witnessed net inflows, taking in $31.8 billion for April. Authorized participants (APs, those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-asset ETFs for the third month running, adding $23.4 billion to equity ETF coffers. And for the sixth straight month, they were net purchasers of bond ETFs—injecting $8.4 billion for April. APs were net sellers of one of the five equity-based ETF macro-classifications—Mixed-Asset ETFs (-$28 million)—while being net purchasers of USDE ETFs (+$17.7 billion), World Equity ETFs (+$5.6 billion), Sector Equity ETFs (+$90 million), and Alternatives ETFs (+$72 million). In this segment, I highlight the April fund-flows results for both types of investment vehicles.

Highlights

  • For the second straight month, mutual fund investors were net redeemers of fund assets, withdrawing $4.0 billion from the conventional funds business for April.
  • For the fourth month in a row, fixed income funds (+$41.9 billion for April) witnessed net inflows, while for the third consecutive month, investors were net redeemers of stock & mixed-asset funds (-$33.4 billion). Money market funds (-$12.5 billion) witnessed net outflows for the second month running.
  • For the third month in a row, authorized participants (APs) were net purchasers of ETFs, injecting $31.8 billion for April. APs were net purchasers of stock & mixed-asset ETFs (+$23.4 billion) and net purchasers of fixed income ETFs (+$8.4 billion).
  • Year to date, APs injected more net new money into bond funds (+$42.3 billion) than into stock & mixed-asset funds (+$35.2 billion).

Click here to download the April 2019 FundFlows Insight Report: Despite Steepening Yield Curve, Investors Embrace Bond Funds in April.

Get In Touch

Subscribe

Related Reports

The recent announcement that one of the best-known fund managers in the U.K., Neil ...

Fixed income funds gained 2.33% on average in Q2. All of the fixed income macro ...

For the month, 95% of all closed-end funds posted NAV-based returns in the black, ...

U.S. investors pushed equity funds to their strongest June gains since 1938 while ...

We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.×