FLSP - U.S. Fund Investors Sour On Money Market Funds And Turn To Domestic Equity ETFs In October

2023-11-20 21:45:31 ET

Summary

• For the second month in a row, mutual fund investors were net redeemers of fund assets, withdrawing $134.2 billion from conventional funds for October.
• Money market funds (-$36.5 billion) witnessed net outflows for the first month in six.
• Fixed income funds (-$36.0 billion) suffered net redemptions for the third consecutive month while investors were net sellers of stock & mixed-assets funds (-$61.7 billion) for the thirty-first straight month.
• APs were net purchasers of ETFs, injecting $32.2 billion for October.
• Fixed income ETFs (+$17.4 billion) witnessed net inflows for the twenty-first straight month while investors were net purchasers of stock & mixed-assets ETFs (+$14.8 billion).

Investors were net redeemers of mutual fund assets for the second month in a row, withdrawing $134.2 billion from the conventional funds business (excluding ETFs, which are reviewed in the section below).

Stock & mixed-assets funds experienced net outflows (-$61.7 billion) for the thirty-first consecutive month. The fixed income funds macro-group—for the third month in a row—witnessed net outflows, handing back $36.0 billion (its largest since last December 2022). Investors gave the cold shoulder to the money market funds macro-group, redeeming $36.5 billion for October—its first monthly net redemption in six.

For the eighteenth consecutive month, ETFs attracted net new money, taking in $32.2 billion for October.

Authorized participants (APs—those investors who create and redeem ETF shares) were net purchasers of stock & mixed-assets ETFs—also for the eighteenth month in a row—injecting $14.8 billion into equity ETF coffers. For the twenty-first month running, they were net purchasers of bond ETFs—injecting $17.4 billion for the month (their largest monthly net inflows since March). APs were net purchasers of just one of the five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$28.0 billion), while being net sellers of Sector Equity ETFs (-$7.6 billion), Alternatives ETFs (-$2.5 billion), World Equity ETFs (-$2.2 billion), and Mixed-Assets ETFs (-$892 million).

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

For further details see: