September 16, 2020

USDE Funds and ETFs Took It on the Chin Again in August While Bond Funds and ETFs Attracted Net New Money

by Tom Roseen.

Investors were net sellers of mutual fund assets for the third month in a row, withdrawing $63.7 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below) for August.

During the month, the major U.S. benchmarks continued on their upward trajectories as investors weighed the ongoing concerns of a rise in new coronavirus outbreaks and the impasse on Capitol Hill on extending the emergency unemployment package against improvements in the U.S. unemployment rate and continued commitment by the Federal Reserve Board to support the economy. For the nineteenth month in a row, stock & mixed-assets funds witnessed net outflows (-$79.8 billion) in August. However, investors continued to pad the coffers of fixed income instruments, pushing the fixed income funds macro-group to its fourth consecutive month of net inflows, injecting $70.5 billion for August. Money market funds (-$54.3 billion) witnessed net outflows for the third consecutive month.

For the twelfth month running, ETFs witnessed net inflows, taking in $30.2 billion for August. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs for the third consecutive month, injecting $13.8 billion into equity ETF coffers. And for the fifth month in a row, they were net purchasers of bond ETFs—injecting $16.4 billion for August. APs were net purchasers of four of the five equity-based ETF macro-classifications, padding the coffers of Sector Equity ETFs (+$9.9 billion), World Equity ETFs (+$5.2 billion), Alternatives ETFs (+$777 million), and Mixed-Assets ETFs (+$336 million), while being net redeemers of U.S. Diversified Equity ETFs (-$2.5 billion).

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

Highlights:

  • Mutual fund investors were net sellers of fund assets for the third month in a row, withdrawing $63.7 billion from the conventional funds business for August.
  • For the third month in a row, fixed income funds (+$70.5 billion for August) witnessed net inflows, while money market funds (-$54.3 billion) suffered net outflows.
  • For the nineteenth consecutive month, investors were net redeemers of stock & mixed-assets funds (-$79.8 billion).
  • APs were net purchasers of ETFs for the twelfth month in a row, injecting $30.2 billion for August.
  • And, for the fifth month in a row, APs were net purchasers of fixed income ETFs (+$16.4 billion), while padding the coffers of stock & mixed-assets ETFs (+$13.8 billion).

Click here to download the August 2020 FundFlows Insight Report: USDE Funds and ETFs Took It on the Chin Again in August While Bond Funds and ETFs Attracted Net New Money.

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