Investors were net purchasers of mutual fund assets for the second month in a row, injecting $283.7 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for March. However, the headline number is misleading.
During the month, the major benchmarks closed in bear market territory, declining at least 20% from recent market highs as stocks were crushed during the month while a novel coronavirus played havoc on the world’s citizens. For the fourteenth month in a row, stock & mixed-assets funds witnessed net outflows (-$132.6 billion, their largest monthly net outflows since at least 2008) in March. Investors became more risk averse during the month, questioning the credit quality of risky assets and causing credit spreads to widen significantly. They pushed the fixed income funds macro-group to its first month of net outflows in 15, withdrawing an unprecedented $265.0 billion for March. Money market funds (+$681.3 billion, a record) witnessed net inflows for the second consecutive month.
For the seventh month running, ETFs witnessed net inflows, taking in $5.8 billion for March. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—for the sixth month in seven—injecting $25.5 billion into equity ETF coffers. However, for the first month in 17, they were net redeemers of bond ETFs—withdrawing $19.7 billion for March—their largest net outflows on record. APs were net redeemers of three of the five equity-based ETF macro-classifications, withdrawing money from World Equity ETFs (-$11.6 billion), Sector Equity ETFs (-$2.1 million) and Mixed-Assets ETFs (-$756 million), while injecting net new money into USDE ETFs (+$36.9 billion, their largest monthly net inflows since December 2016) and Alternatives ETFs (+$3.1 billion).
In this report, I highlight the March 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 $283.7 billion into the conventional funds business for March.
- For the first month in 15, fixed income funds (-$265.0 billion for March) witnessed unprecedented net outflows, while money market funds (+$681.3 billion) witnessed record net inflows for the month. For the fourteenth consecutive month, investors were net redeemers of stock & mixed-assets funds (-$132.6 billion, largest since at least 2008).
- For the seventh month in a row, authorized participants (APs) were net purchasers of ETFs, injecting $5.8 billion for March.
- However, for the first month in 17, APs were net redeemers of fixed income ETFs (-$19.7 billion, a record sum), while being net purchasers of stock & mixed-assets ETFs (+$25.5 billion).
Click here to download the March 2020 FundFlows Insight Report: Record Flows Abound in March as Fund and ETF Investors React to COVID-19 and Oil-Related Shocks.
