November 19, 2018

Slowing Growth and Interest Rate Fears Weigh on Fund and ETF Investors in October

by Tom Roseen.

For the second month in a row investors were net redeemers of mutual fund assets, withdrawing $28.7 billion from the conventional funds (ex-ETFs) business for October. Rising interest rates and fears of slowing global growth weighed on flows into long-term funds. For the first month in eight the fixed income funds macro-group witnessed net outflows, handing back $20.4 billion for the month. And for the sixth consecutive month stock & mixed-asset funds witnessed net outflows (-$42.1 billion for October, their largest monthly net outflows since November 2016), while money market funds (+$33.8 billion, for their third month of inflows in four) witnessed the only net inflows.

For the fourth month in a row ETFs overall witnessed net inflows, taking in $5.7 billion for October. Authorized participants (APs, those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-asset ETFs, adding $9.8 billion to the equity ETF coffers. However, for the first month in 40 they were net redeemers of bond ETFs—withdrawing $4.1 billion for October. APs were net purchasers of only two of the five equity-based ETF macro-classifications: USDE ETFs (+$15.2 billion) and World Equity ETFs (+$6.7 billion), while being net redeemers of Sector Equity ETFs (-$11.5 billion), Alternatives ETFs (-$455 million), and Mixed-Asset ETFs (-$199 million). In this segment I highlight the October fund-flow results for both types of investment vehicles.

Highlights:

  • For the second consecutive month mutual fund investors were net redeemers of fund assets, withdrawing $28.7 billion from the conventional funds business for October.
  • For the first month in eight fixed income funds (-$20.4 billion for October, their largest monthly net outflows since December 2015) witnessed net outflows, while for the sixth month in a row investors were net redeemers of stock & mixed-asset funds (-$42.1 billion). Money market funds (+$33.8 billion) witnessed the only net inflows.
  • For the fourth month running authorized participants (APs) were net purchasers of ETFs, injecting $5.7 billion for October. APs were net purchasers of stock & mixed-asset ETFs (+$9.8 billion).
  • However, for the first month in 40 APs were net redeemers of fixed income ETFs (-$4.1 billion for October).

Click here to download the October 2018 FundFlows Insight Report: Slowing Growth and Interest Rate Fears Weigh on Fund and ETF Investors in October.

Get In Touch

Subscribe

Related Reports

Mutual fund selection is a combination of art and science. The art is qualitative ...

For the month 62% of all CEFs posted NAV-based returns in the black, with 67% of ...

For the month only 6% of all closed-end funds (CEFs) posted net asset value (NAV)-based ...

  Fixed income funds posted a positive return of 0.38% on average for Q3 2018 ...