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October 17, 2023

U.S. Fund Investors Favor ETFs Over Conventional Long-Term Funds in September

by Tom Roseen.

Investors were net redeemers of mutual fund assets for the third month in four, withdrawing $13.2 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below).

For the thirtieth consecutive month, stock & mixed-assets funds experienced net outflows (-$47.6 billion). The fixed income funds macro-group—for the second month in a row—witnessed net outflows, handing back $20.6 billion (its largest since last March). Attractive short-term yields and continued uncertainty helped the money market funds macro-group (+$54.9 billion) attract net new money for the fifth straight month.

For the seventeenth consecutive month, ETFs attracted net new money, taking in $38.3 billion for September.

Authorized participants (APs—those investors who create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—also for the seventeenth month in a row—injecting $28.1 billion into equity ETF coffers. For the twentieth month running, they were net purchasers of bond ETFs—injecting $10.2 billion for the month. APs were net purchasers of three of the five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$32.5 billion), Alternatives ETFs (+$773 million), and World Equity ETFs (+$568 million), while being net sellers of Sector Equity ETFs (-$5.7 billion) and Mixed-Assets ETFs (-$63 million).

In this report, I highlight the September 2023 fund-flows results and trends for both ETFs and conventional mutual funds (including variable annuity underlying funds).

Highlights:

  • For the third month in four, mutual fund investors were net redeemers of fund assets, withdrawing $13.2 billion from conventional funds for September.
  • Money market funds (+$54.9 billion) witnessed net inflows for the fifth straight month.
  • Fixed income funds (-$20.6 million) suffered net redemptions for the second consecutive month while investors were net sellers of stock & mixed-assets funds (-$47.6 billion) for the thirtieth straight month.
  • APs were net purchasers of ETFs, injecting $38.3 billion for September.
  • Fixed income ETFs (+$10.2 billion) witnessed net inflows for the twentieth straight month while investors were net purchasers of stock & mixed-assets ETFs (+$28.1 billion).
  • Year to date, equity ETFs attracted a net $188.9 billion while conventional equity funds handed back $436.4 billion.

Click here to download the September 2023 FundFlows Insight Report: U.S. Fund Investors Favor ETFs Over Conventional Long-Term Funds in September.

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