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July 17, 2019

Fund Investors Remain Cautious in June, But Not APs

by Tom Roseen.

For the second month in a row, investors were net purchasers of mutual fund assets, injecting $20.3 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for June. However, the headline numbers were slightly misleading. Fund investors remained risk averse even though the Dow Jones Industrial Average posted its strongest June return since 1938, rising 7.19% for the month. For the fifth month in a row, stock & mixed-assets funds witnessed net outflows (-$37.7 billion) for June. However, Treasuries rallied for the month on mounting uncertainty, propelling the fixed income funds macro-group to its sixth consecutive month of net inflows, taking in $15.5 billion for June. And for the second month running, money market funds (+$42.4 billion) witnessed net inflows.

For the fourth month in five, ETFs overall witnessed net inflows, taking in $61.2 billion for June. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—also for the fourth month in five—injecting $34.3 billion into equity ETF coffers. And for the eighth straight month, they were net purchasers of bond ETFs—injecting $26.9 billion for June. APs were net purchasers of three of the five equity-based ETF macro-classifications—USDE ETFs (+$26.7 billion), Sector Equity ETFs (+$7.5 billion), and Alternatives ETFs (+$494 million)—while being net redeemers of World Equity ETFs (-$211 million) and Mixed-Assets ETFs (-$107 million).

In this segment, I highlight the June fund-flows results for both types of investment vehicles.

Highlights:

  • For the second consecutive month, mutual fund investors were net purchasers of fund assets, injecting $20.3 billion into the conventional funds business for June.
  • For the sixth month in a row, fixed income funds (+$15.5 billion for June) witnessed net inflows, while for the fifth consecutive month, investors were net redeemers of stock & mixed-assets funds (-$37.7 billion). Money market funds (+$42.4 billion) witnessed net inflows for the second straight month.
  • For the fourth month in five, authorized participants (APs) were net purchasers of ETFs, injecting $61.2 billion for June. APs were net purchasers of stock & mixed-assets ETFs (+$34.3 billion) and fixed income ETFs (+$26.9 billion).
  • Year to date, APs injected more net new money into bond ETFs (+$75.5 billion) than into stock & mixed-assets ETFs (+$52.8 billion).

Click here to download the June 2019 FundFlows Insight Report: Fund Investors Remain Cautious in June, But Not APs.

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