February 10, 2019

Fund Investors Embrace Domestic Equity Funds, While ETF Investors are Net Redeemers so far in 2019

by Tom Roseen.

In 2018, equity mutual fund investors (including conventional funds and ETFs) were net redeemers of domestic equity funds (-$57.5 billion) but net purchasers of nondomestic equity funds (+$47.0 billion). Interestingly, though, mutual fund investors were actually net redeemers of domestic equity funds, redeeming a net $161.2 billion for 2018, while authorized participants (APs, those investors who actually create and redeem ETF shares) were net purchasers of domestic equity ETFs, injecting $103.7 billion for the year.

The roles have reversed for 2019, thus far. Through the Lipper fund-flows week ended February 6, 2019, fund investors injected a net $11.7 billion into domestic equity funds, while APs were net redeemers, pulling out $26.2 billion year-to-date. On the conventional fund side, investors padded the coffers of large-cap funds (+$8.3 billion) and small-cap funds (+$2.7 billion), while APs were net redeemers of large-cap funds, pulling out a net $19.9 billion.

On the conventional fund side of the business, we note the Fidelity 500 Index Fund (FXAIX) was the primary attractor of investor assets through the end of January, taking in some $5.2 billion, followed by the American Funds American Balanced Fund (ABALX), with the portfolio (that is all share classes) attracting $961.5 million. On the ETF side, we saw that while iShares Edge MSCI USA Quality Factor ETF (QUAL, +$1.8 billion), SPDR S&P Dividend ETF (SDY, +$1.2 billion), and iShares Edge MSCI Min Vol USA ETF (USMV, +1.1 billion) took in the largest draws of net new money of the domestic equity funds, four of the most popular domestic equity ETFs witnessed net redemptions: SPDR S&P 500 ETF Trust (SPY, -$12.2 billion), iShares Core S&P 500 ETF (IVV, -$6.8 billion), iShares Russell 1000 Value ETF (IWD, -$2.6 billion), and iShares Russell 2000 ETF (IWM, -$2.5 billion).

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