May 18, 2020

Fund Investors Remained Risk Averse While ETF Investors Were More Risk Seeking in April

by Tom Roseen.

Investors were net purchasers of mutual fund assets for the third month in a row, injecting $354.1 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for April. However, virtually all of those net inflows were into short-term assets.

During the month, the major benchmarks won back some of the losses witnessed in March as investors cheered the Federal Reserve’s “whatever it takes” attitude, plans for soft economic reopenings, and declining hospitalization rates. For the fifteenth month in a row, stock & mixed-assets funds witnessed net outflows (-$26.6 billion) in April. Investors remained risk averse during the month, questioning the credit quality of risky assets—pushing the fixed income funds macro-group to its second consecutive month of net outflows—withdrawing $9.1 billion for April. Money market funds (+$390.0 billion) witnessed net inflows for the third consecutive month.

For the eighth month running, ETFs witnessed net inflows, taking in $44.4 billion for April. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—for the second month in a row—injecting $23.3 billion into equity ETF coffers. And for the seventeenth month in 18, they were net purchasers of bond ETFs—injecting $21.1 billion for April—their largest monthly net inflows in 10. APs were net purchasers of four of the five equity-based ETF macro-classifications, padding the coffers of Sector Equity ETFs (+$25.7 billion), Alternatives ETFs (+$5.8 billion), USDE ETFs (+$1.3 billion, and Mixed-Assets ETFs (+$217 million), while being net redeemers of World Equity ETFs (-$9.8 billion).

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

Highlights:

  • For the third consecutive month, mutual fund investors were net purchasers of fund assets, injecting $354.1 billion into the conventional funds business for April.
  • For the second month running, fixed income funds (-$9.1 billion for April) witnessed net outflows, while money market funds (+$390.0 billion) saw strong net inflows for the month. For the fifteenth consecutive month, investors were net redeemers of stock & mixed-assets funds (-$26.6 billion).
  • For the eighth month in a row, APs were net purchasers of ETFs, injecting $44.4 billion for April.
  • And, for the seventeenth month in 18, APs were net purchasers of fixed income ETFs (+$21.1 billion), while being net purchasers of stock & mixed-assets ETFs (+$23.3 billion).

Click here to download the April 2020 FundFlows Insight Report: Fund Investors Remained Risk Averse While ETF Investors Were More Risk Seeking in April.

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