Investors Prefer Equity ETFs Over Equity Funds in September

Investors were net purchasers of mutual fund assets for the second month in a row, injecting $6.9 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below) for September. For the sixth month in a row, stock & mixed-assets funds experienced net outflows (-$31.2 billion). And despite the Treasury yield curve steepening for the month, the fixed income funds macro-group took in net new money for the seventeenth consecutive month, taking in $35.5 billion for September. Money market funds (+$2.6 billion) attracted net new money for the second month running. Over the last nine months, conventional stock & mixed-assets funds handed back $216.9 billion, while bond and money market funds attracted $419.1 billion and $200.2 billion, respectively, of net new money.

For the twenty-fifth straight month, ETFs witnessed net inflows, taking in $52.2 billion for September. Authorized participants (APs—those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs for the sixteenth consecutive month, injecting $36.5 billion into equity ETF coffers. And for the eighteenth month in a row, they were net purchasers of bond ETFs—injecting $15.7 billion for the month. Once again, APs were net purchasers of all five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$26.0 billion), World Equity ETFs (+$8.0 billion), Mixed-Assets ETFs (+$1.2 billion), Alternatives ETFs (+$1.0 billion), and Sector Equity ETFs (+$270 million). Over the last nine months, stock & mixed-assets ETFs took in $470.5 billion and bond ETFs attracted $160.8 billion of net new money.

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

Highlights:

• For the second consecutive month, mutual fund investors injected $6.9 billion into conventional funds for September.
• Fixed income funds (+$35.5 billion) witnessed net inflows for the seventeenth month in a row, while money market funds (+$2.6 billion) experienced net inflows for the second month in a row.
• For the sixth straight month, investors were net sellers of stock & mixed-assets funds (-$31.2 billion).
• Authorized Participants (APs) were net purchasers of ETFs, injecting $52.2 billion for September, for their twenty-fifth month of consecutive inflows.
• And, for the eighteenth month in a row, fixed income ETFs (+$15.7 billion for September) attracted net new money while investors padded the coffers of stock & mixed-assets ETFs (+$36.5 billion), their sixteenth straight month of net inflows.
• For the first month in seven, small-cap ETFs (+$4.5 billion) experienced the largest net inflows of the four capitalization groups.