October 16, 2018

Fund Investors Sour on Equity Funds in September, but APs Remain Confident

by Tom Roseen.

For the first month in three investors were net redeemers of mutual fund assets, withdrawing $31.2 billion from the conventional funds business (excluding ETFs) for September. Despite the Federal Reserve’s hiking its key lending rate during September, for the seventh month in a row the fixed income funds macro-group witnessed net inflows, taking in $16.0 billion for the month. However, for the fifth consecutive month stock & mixed-asset funds witnessed net outflows (-$37.5 billion for September), while money market funds (-$9.7 billion) suffered net redemptions for the first month in three.

For the third month in a row ETFs overall witnessed net inflows, taking in $36.3 billion for September. Authorized participants (APs, those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-asset ETFs, adding $29.3 billion to the equity ETF coffers. And for the thirty-ninth consecutive month they were net purchasers of bond ETFs—injecting $7.0 billion for September. APs were net purchasers of four of the five equity-based ETF macro-classifications: USDE ETFs (+$23.4 billion), Sector Equity ETFs (+$5.8 billion), Alternatives ETFs (+$366 million), and Mixed-Asset ETFs (+$87 million), while for the fourth month in five they were net redeemers of World Equity ETFs (-$328 million). In this segment I highlight the September fund-flow results for both types of investment vehicles.

Highlights:

  • For the first month in three mutual fund investors were net redeemers of fund assets, withdrawing $31.2 billion from the conventional funds business for September. Despite the Fed rate hike, for the seventh consecutive month fixed income funds (+$16.0 billion for September) witnessed net inflows, while for the fifth month in a row investors were net redeemers of stock & mixed-asset funds (-$37.5 billion). Money market funds (-$9.7 billion) also suffered net redemptions.
  • For the first month in three Lipper’s World Equity Funds macro-classification witnessed net inflows, taking in $324 million for September.
  • For the third month running APs were net purchasers of ETFs, injecting $36.3 billion for September. APs were net purchasers of stock & mixed-asset ETFs (+$29.3 billion) and bond ETFs (+$7.0 billion).
  • For the fourth month in five World Equity ETFs (-$328 million for September) handed back net money.

Click here to download the September 2018 FundFlows Insight Report: Fund Investors Sour on Equity Funds in September, but APs Remain Confident.

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