Investors Prefer Large-Cap ETFs Over Large-Cap Funds in August

Investors were net purchasers of mutual fund assets for the first month in three, injecting $44.6 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for August. For the fifth month in a row, stock & mixed-assets funds experienced net outflows (-$18.1 billion). And despite the Treasury yield curve experiencing minor steepening for the month, the fixed income funds macro-group took in net new money for the sixteenth consecutive month, taking in $38.9 billion for August. Money market funds (+$23.8 billion) attracted net new money for the first month in three. Over the last eight months, conventional stock & mixed-assets funds handed back $185.6 billion, while bond and money market funds attracted $383.6 billion and $197.6 billion, respectively, of net new money.

For the twenty-fourth straight month, ETFs witnessed net inflows, taking in $68.4 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 fifteenth consecutive month, injecting $48.9 billion into equity ETF coffers. And for the seventeenth month in a row, they were net purchasers of bond ETFs—injecting $19.5 billion for the month. APs were net purchasers of all five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$33.5 billion), World Equity ETFs (+$8.7 billion), Sector Equity ETFs (+$4.8 billion), Alternatives ETFs (+$1.4 billion), and Mixed-Assets ETFs (+$576 million). Over the last eight months, stock & mixed-assets ETFs took in $434.0 billion and bond ETFs attracted $145.1 billion of net inflows.

In this report, I highlight the August 2021 fund-flows results and trends for both ETFs and conventional mutual funds.

Highlights:

• For the first month in three, mutual fund investors were net purchasers of fund assets, injecting $44.6 billion into conventional funds for August.
• Fixed income funds (+$38.9 billion for August) witnessed net inflows for the sixteenth month in a row, while money market funds (+$23.8 billion) experienced net inflows for the first month in three.
• For the fifth straight month, investors were net sellers of stock & mixed-assets funds (-$18.1 billion).
• APs were net purchasers of ETFs, injecting $68.4 billion for August, for their twenty-fourth month of consecutive inflows.
• And, for the seventeenth month in a row, fixed income ETFs (+$19.5 billion for August) attracted net new money, while investors padded the coffers of stock & mixed-assets ETFs (+$48.9 billion), their fifteenth straight month of net inflows.