November 16, 2020

Investors Give the Cold Shoulder to U.S. Diversified Equity Funds and ETFs in October

by Tom Roseen.

Investors were net sellers of mutual fund assets for the fifth month in a row, withdrawing $75.9 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below) for October. For the twenty-first month in a row, stock & mixed-assets funds witnessed net outflows (-$75.3 billion) in October. However, investors continued plow money into fixed income instruments, pushing the fixed income funds macro-group to its sixth consecutive month of net inflows, injecting $45.2 billion for October. However, money market funds (-$45.9 billion) witnessed net outflows for the fifth consecutive month.

For the fourteenth month running, ETFs witnessed net inflows, taking in $31.6 billion for October. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs for the fifth consecutive month, injecting $10.1 billion into equity ETF coffers. And for the seventh month in a row, they were net purchasers of bond ETFs—injecting $21.4 billion for October. APs were net purchasers of four of the five equity-based ETF macro-classifications, padding the coffers of Sector Equity ETFs (+$6.4 billion), World Equity ETFs (+$4.2 billion), Alternatives ETFs (+$256 million), and Mixed-Assets ETFs (+$184 million), while being net redeemers of U.S. Diversified Equity ETFs (+$875 million).

In this report, I highlight the October and year-to-date fund-flows results for both types of investment vehicles.

Highlights:

  • For the fifth month in a row, mutual fund investors were net sellers of fund assets, withdrawing $75.9 billion from the conventional funds business for October.
  • Fixed income funds (+$45.2 billion for October) witnessed net inflows for the sixth month in a row, while money market funds (-$45.9 billion) suffered net outflows. For the twenty-first consecutive month, investors were net redeemers of stock & mixed-assets funds (-$75.3 billion).
  • APs were net purchasers of ETFs, injecting $31.6 billion for October, for the fourteenth month of consecutive inflows.
  • And, for the seventh month running, APs were net purchasers of fixed income ETFs (+$21.4 billion), while padding the coffers of stock & mixed-assets ETFs (+$10.1 billion) for the fifth month running.

Click here to download the October 2020 FundFlows Insight Report: Investors Give the Cold Shoulder to U.S. Diversified Equity Funds and ETFs in October.

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