Fund Flow Trends
Many fund categories are exhibiting similar but muted net cash flow trends to those recorded at this time last year. However, equity ETF net cash flows, both U.S.- and foreign-focused, remain flat in contrast to last year’s strong start. Nonetheless, the definitive shift in trend from bond to equity funds which began midway through 2013 is still intact.
A variety of records continue to be broken for mutual fund and ETF industry cash flows so far this year in fund genres such as domestic equity ETFs and hybrid mutual funds. Domestic equity mutual funds are managing to hold on to some net cash inflows, while total equity and hybrid fund flows are experiencing levels not seen since 2000. Foreign-focused mutual funds continue raking in the dough, while recently bond funds have experienced unprecedented levels of net outflows. Chart 1 summarizes YTD Net Cash Flows for 2013 compared to 2012 for the broad fund categories.
Most broad fund categories experienced positive net cash flows this week, with the exception of money market funds and domestic equity ETFs.
Domestic equity funds have seen net cash outflows so far in 2015, while bond funds have collected more net cash than any other category.
Bond funds and hybrid mutual funds captured estimated net cash inflows this week, while domestic equity mutual funds saw flat net cash flows.
For the first week of 2015, estimated net cash fund flow trends were mixed but mostly negative for major fund subsets. Bond and hybrid mutual funds were the exceptions.
2013 and 2014 mark the first two years since 2007 in which equity fund nominal annual cash inflow tallies have outweighed those of bond funds.
Contrasting last week’s trends, most broad fund categories recorded net cash inflows this week. Domestic equity ETFs brought in the largest weekly net cash inflow of the year for the category.
Domestic equity ETF net cash inflows continued this week at a decelerated pace; the large cap subset, however, saw net cash outflows.
Domestic equity ETF net cash flows have been positive for the past five of six weeks, while domestic equity mutual fund net flows have been negative in four of the past five.
Weekly net cash inflows to domestic equity ETFs of $6.8 billion pushed YTD flow tallies ($91.6 billion) above those collected over the same period in 2013.
Domestic equity ETF flows transitioned to slight negative net cash flows this week after three straight weeks of robust inflows. Bond ETFs also saw net outflows after six consecutive weeks of net inflows.
Over the past three weeks investors have plowed a net $35 billion into domestic equity ETFs. Bond ETF flows have also been robust, collecting a net $16 billion over the past six weeks.
All broad fund categories saw positive net cash flows for the week ended 11/5. Domestic equity ETF flows were particularly noteworthy, capturing a net $15 billion.
Bond mutual funds have seen persistent negative net cash flows, and YTD flows are now about $40 billion lighter versus tallies recorded just one month ago.