February 18, 2020

Fund Investors Remain Cautious While APs Embrace Stock and Bond ETFs in January

by Tom Roseen.

For the first month in nine, investors were net sellers of mutual fund assets, withdrawing $6.8 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below) for January.

During the month, markets took a rollercoaster ride on news of increased Middle East tensions, weaker-than-expected economic data, better-than-expected Q4 earnings reports, signed trade deals, and the emergence of the deadly coronavirus. For the twelfth month in a row, stock & mixed-assets funds witnessed net outflows (-$45.3 billion) in January. Investors continued to look for yield and safe places to hide, pushing the fixed income funds macro-group to its thirteenth consecutive month of net inflows, injecting $62.0 billion for January. Money market funds (-$23.4 billion) witnessed net outflows for the first month in nine.

For the fifth month running, ETFs witnessed net inflows, taking in $55.7 billion for January. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—also for the fifth month in a row—injecting $37.7 billion into equity ETF coffers. And for the fifteenth straight month, they were net purchasers of bond ETFs—injecting $18.0 billion for January. APs were net purchasers of all five equity-based ETF macro-classifications, injecting net new money into USDE ETFs (+$18.8 billion), World Equity ETFs (+$10.4 billion), Sector Equity ETFs (+$7.9 billion), Alternatives ETFs (+$556 million), and Mixed-Assets ETFs (+$68 million).

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

Highlights

  • For the first month in nine, mutual fund investors were net redeemers of fund assets, withdrawing $6.8 billion from the conventional funds business for January.
  • For the thirteenth month in a row, fixed income funds (+$62.0 billion for January) witnessed net inflows, while money market funds (-$23.4 billion) witnessed net outflows for the first month in nine. For the twelfth consecutive month, investors were net redeemers of stock & mixed-assets funds (-$45.3 billion).
  • For the fifth month in a row, authorized participants (APs) were net purchasers of ETFs, injecting $55.7 billion for January. APs were net purchasers of stock & mixed-assets ETFs (+$37.7 billion), while also being net purchasers of fixed income ETFs (+$18.0 billion).
  • Over the past three months, APs injected more net new money into stock & mixed-assets ETFs (+$111.2 billion) than into fixed income ETFs (+$41.5 billion).

Click here to download the January 2020 FundFlows Insight Report: Fund Investors Remain Cautious While APs Embrace Stock and Bond ETFs in January.

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