SGOV - U.S. Fund Investors Tap The Brakes In August

2023-09-22 18:18:00 ET

Summary

• For the first month in three, mutual fund investors were net purchasers of fund assets, injecting $50.0 billion into conventional funds for August.
• Money market funds (+$107.1 billion) witnessed net inflows for the fourth straight month.
• Fixed income funds (-$602 million) suffered net redemptions for the first month in four, while investors were net sellers of stock & mixed-assets funds (-$56.6 billion) for the twenty-ninth month.
• APs were net purchasers of ETFs, injecting $14.2 billion for August.
• Fixed income ETFs (+$9.2 billion) witnessed net inflows for the nineteenth straight month, while investors were net purchasers of stock & mixed-assets ETFs (+$4.9 billion).

Investors were net purchasers of mutual fund assets for the first month in three, injecting $50.0 billion into the conventional funds business (excluding ETFs, which are reviewed in the section below).

However, the headline numbers are a bit misleading. For the twenty-ninth consecutive month, stock & mixed-assets funds experienced net outflows (-$56.6 billion). With inflationary concerns still lingering and the possibility of another interest rate hike later this year, the fixed income funds macro-group—for the first month in four—witnessed net outflows but handed back just $602 million. Attractive short-term yields and continued uncertainty helped the money market funds macro-group (+$107.1 billion) attract net new money for the fourth straight month.

ETFs attracted net new money for the sixteenth consecutive month, taking in $14.2 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 sixteenth month in a row—injecting $4.9 billion into equity ETF coffers. For the nineteenth month running, they were net purchasers of bond ETFs—injecting $9.2 billion for the month. APs were net purchasers of three of the five equity-based ETF macro-classifications, padding the coffers of U.S. Diversified Equity ETFs (+$12.0 billion), World Equity ETFs (+$1.5 billion), and Mixed-Assets ETFs (+$29 million) while being net sellers of Sector Equity ETFs (-$7.5 billion) and Alternatives ETFs (-$1.2 billion).

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

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