July 21, 2020

Bond Funds and ETFs Were Primary Attractors of Investors’ Assets in June

by Tom Roseen.

Investors were net sellers of mutual fund assets for the first month in five, withdrawing $128.9 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below) for June.

During the month, the major benchmarks witnessed wild swings as investors weighed the ongoing concerns of a rise in new coronavirus outbreaks against improvements in the U.S. unemployment rate and commitments by both the Federal Reserve Board and the Department of Treasury to continue to shore up the economy. For the seventeenth month in a row, stock & mixed-assets funds witnessed net outflows (-$66.7 billion) in June. However, investors continued to embrace fixed income instruments, pushing the fixed income funds macro-group to its second consecutive month of net inflows, injecting $68.1 billion for June. Money market funds (-$130.2 billion) witnessed net outflows for the first month in five (their largest monthly net outflows since March 2010).

For the tenth month running, ETFs witnessed net inflows, taking in $54.8 billion for June. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs for the third month in four, injecting $22.3 billion into equity ETF coffers. And for the third month in a row, they were net purchasers of bond ETFs—injecting $32.5 billion for June—their largest monthly net inflows on record. APs were net purchasers of four of the five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$9.5 billion), Sector Equity ETFs (+$7.9 billion), World Equity ETFs (+$4.6 billion), and Mixed-Assets ETFs (+$365 million), while being net redeemers of Alternatives ETFs (-$16 million).

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

Highlights:

  • For the first month in five, mutual fund investors were net sellers of fund assets, withdrawing $128.9 billion from the conventional funds business for June.
  • For the second month in a row, fixed income funds (+$68.1. billion for June) witnessed net inflows, while money market funds (-$130.2 billion) suffered net outflows. For the seventeenth consecutive month, investors were net redeemers of stock & mixed-assets funds (-$66.7 billion).
  • For the tenth month in a row, APs were net purchasers of ETFs, injecting $54.8 billion for June.
  • And, for the third month in a row, APs were net purchasers of fixed income ETFs (+$32.5 billion, their largest on record), while adding to their holdings in stock & mixed-assets ETFs (+$22.3 billion).

Click here to download the June 2020 FundFlows Insight Report: Bond Funds and ETFs Were Primary Attractors of Investors’ Assets in June.

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