XLF - Fund And ETF Investors Give World Equity Funds The Cold Shoulder In August

Summary

• For the eighth straight month, mutual fund investors were net redeemers of fund assets, withdrawing $55.3 billion from conventional funds for August.
• Fixed income funds (+$1.9 billion) witnessed net inflows for the first month in nine, while money market funds (-$8.2 billion) suffered net redemptions for the first month in three.
• For the seventeenth straight month, investors were net sellers of stock & mixed-assets funds (-$48.9 billion).
• APs were net purchasers of ETFs, injecting $40.5billion for August.
• And, for the seventh straight month, fixed income ETFs (+$13.9 billion) witnessed net inflows while investors were net purchasers of stock & mixed-assets ETFs (+$26.6 billion).

Investors were net redeemers of mutual fund assets for the eighth month in a row, redeeming $55.3 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below) for August. For the seventeenth month running, stock & mixed-assets funds experienced net outflows (-$48.9 billion). Despite the 10-year Treasury yield rising 48 basis points (bps) during the month, the fixed income funds macro-group—for the first month in nine—witnessed net inflows, taking in $1.9 billion. Money market funds (-$8.2 billion) witnessed net outflows for the first month in three.

For the fourth consecutive month, ETFs attracted net new money, taking in $40.5 billion for August. Authorized participants (APs—those investors who create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—also for the fourth month in a row—injecting $26.6 billion into equity ETF coffers. For the seventh month in a row, they were net purchasers of bond ETFs—injecting $13.9 billion for the month. APs were net purchasers of four of the five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$22.1 billion), Alternatives ETFs (+$3.5 billion), Sector Equity ETFs (+$1.1 billion), and Mixed-Assets ETFs (+$297 million), while being net sellers of World Equity ETFs (-$321 million).

In this report, I highlight the August 2022 fund-flows results and trends for both ETFs and conventional mutual funds (including variable annuity underlying funds).

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