SQQQ - Investors Turn To ETFs In April While Giving A Cold Shoulder To Funds

2023-05-17 12:03:35 ET

Summary

• For the first month in four, mutual fund investors were net redeemers of fund assets, withdrawing $46.0 billion from conventional funds for April.
• Fixed income funds (-$3.6 billion) witnessed net outflows for the second month in a row, while money market funds (-$4.3 billion) suffered their first net monthly redemptions in seven.
• For the twenty-fifth straight month, investors were net sellers of stock & mixed-assets funds (-$38.1 billion).
• APs were net purchasers of ETFs, injecting $33.3billion for April.
• And, for the fifteenth straight month, fixed income ETFs (+$16.0 billion for April) witnessed net inflows while investors were net purchasers of stock & mixed-assets ETFs (+$17.3 billion).

Despite both taxable bond and equity funds posting plus-side returns for April, investors were net redeemers of mutual fund assets for the first month in four, withdrawing $46.0 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below).

For the twenty-fifth consecutive month, stock & mixed-assets funds experienced net outflows (-$38.1 billion). And because of ongoing inflation concerns and the then growing probabilities of an additional interest rate hike by the Federal Reserve Board in May, the fixed income funds macro-group—for the second month in a row—witnessed net outflows, handing back $3.6 billion. After experiencing its strongest monthly net inflows in March since April 2020, the money market funds (-$4.3 billion) macro-group experienced its first monthly net outflows in seven.

For the twelfth consecutive month, ETFs attracted net new money, taking in $33.3 billion for April. Authorized participants (APs—those investors who create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—also for the twelfth month in a row—injecting $17.3 billion into equity ETF coffers. For the fifteenth month running, they were net purchasers of bond ETFs—injecting $16.0 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 (+$11.9 billion), World Equity ETFs (+$3.8 billion), Alternatives ETFs (+$1.8 billion), and Sector Equity ETFs (+$18 million) while being net sellers of Mixed-Assets ETFs (-$133 million).

In this report, I highlight the April 2023 fund-flows results and trends for both ETFs and conventional mutual funds (including variable annuity underlying funds).

For further details see: