September 18, 2019

Conventional Equity Funds and ETFs Witness Net Outflows in August

by Tom Roseen.

For the fourth month in a row, investors were net purchasers of mutual fund assets, injecting $64.9 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for August. However, the headline number was once again misleading. Fund investors remained risk averse as market volatility increased, with wild swings in both directions and deteriorating trade negotiations between China and the U.S. For the seventh month in a row, stock & mixed-assets funds witnessed net outflows (-$29.4 billion) for August. Treasuries rallied for the month on increasing uncertainty, propelling the fixed income funds macro-group to its eighth consecutive month of net inflows, taking in $10.6 billion for August. Money market funds (+$83.6 billion) witnessed net inflows for the fourth month running—their largest monthly net inflows since December 2008.

For the first month in three, ETFs witnessed net outflows, handing back $6.0 billion for August. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net redeemers of stock & mixed-assets ETFs—also for the first month in three—withdrawing $18.1 billion from equity ETF coffers. And for the tenth straight month, they were net purchasers of bond ETFs—injecting $12.1 billion for August. APs were net purchasers of two of the five equity-based ETF macro-classifications, injecting net new money into Alternatives ETFs (+$605 million) and Mixed-Assets ETFs (+$130 million), while being net redeemers of World Equity ETFs (-$13.3 billion), USDE ETFs (-$3.7 billion), and Sector Equity ETFs (-$1.9 billion).

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

Highlights:

  • For the fourth consecutive month, mutual fund investors were net purchasers of fund assets, injecting $64.9 billion into the conventional funds business for August.
  • For the eighth month in a row, fixed income funds (+$10.6 billion for August) witnessed net inflows, while for the seventh consecutive month, investors were net redeemers of stock & mixed-assets funds (-$29.4 billion). Money market funds (+$83.6 billion) witnessed net inflows for the fourth straight month.
  • For the first month in three, authorized participants (APs) were net sellers of ETFs, withdrawing $6.0 billion for August. APs were net redeemers of stock & mixed-assets ETFs (-$18.1 billion), while being net purchasers of fixed income ETFs (+$12.1 billion).
  • Year to date, APs injected more net new money into bond ETFs (+$97.4 billion) than into stock & mixed-assets ETFs (+$46.7 billion).

Click here to download the August 2019 FundFlows Insight Report: Conventional Equity Funds and ETFs Witness Net Outflows in August.

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