Lipper Fund Flows Insight Report: Stocks Rally, but Equity Fund Flows Falter
Investors remain wary of stock funds, as diversified US equity funds rack up their 15th straight month of net withdrawals
The stock market may have marched to its fifth straight week of gains by last Friday, but that wasn’t enough to persuade investors to hang on to their equity mutual funds, according to data released late yesterday by Lipper, a division of Thomson Reuters.
During the week ended Wednesday, August 15, investors were net purchaser of mutual fund assets, putting $11.2 billion to work in mutual funds and exchange-traded vehicles. But net redemptions of fund assets hit $6.3 billion during the week, even as investors invested a net $13.5 billion into money market funds, $3 billion into taxable bond funds and $1 billion into municipal bond funds.
Data for the first seven months of July also released yesterday, as seen in this report from Lipper, remind us that this pattern is no anomaly.
In July, investors put a mere $800 million into equity and mixed-asset funds out of the total $54.2 billion in net inflows into conventional funds business. They pulled a net $12.9 billion from U.S. diversified stock funds, marking the 15th consecutive month of net redemptions, while large-cap stock funds saw net redemptions of $12 billion – the 38th month running in which they have seen bearish investors pull back.
Investors remain enthusiastic about exchange-traded funds, which experienced their eighth straight month of net inflows in July. Investors appear less averse to owning equity funds when those come in the form of ETFs; net sales of equity ETFs hit $15.3 billion for the month.
Still, in the most recent week, even equity ETFs hit a speed bump, suffering net redemptions of about $4 billion. The bulk of those redemptions came as investors pulled money out of ETFs tied to broad indexes like the S&P 500 and the Russell 2000.
Investors’ craving for yield – however small – remains intact, however. Equity income funds attracted $159 million of net inflows, while real estate funds drew in another $122 million. Despite the lower yields on investment-grade debt, even funds focusing on this part of the market attracted fresh inflows, with investors steering cash into municipal bond funds, high-yield bond funds and other investment-grade products.
For more information on this week’s fund flows data, please visit www.lipperusfundflows.com.