Since the beginning of the year, investors are getting into ETFs while being net buyers of conventional funds
Investors in the fund were net buyers of short-term assets for the week of Refinitiv Lipper fund flows ending July 6, 2022, injecting $20.4 billion net into money market funds. However, for the same period, fund and ETF investors were net redeemers of equity funds (-$7.9 billion), municipalities bond funds (-$313 million) and taxable bond funds (-$111 million).
For the week of fund flows, investors continued to gravitate toward defensive equities, with the main draws to investor assets being Treasury funds (+$5.2 billion including ETFs), Income Equity Funds (+$1.5 billion), Healthcare/Biotech Funds (+$1.1 billion) and Utilities Sector Funds (+$591 million). And while conventional fund investors were net buyers of high yield corporate funds (-$585 million), ETF investors were net buyers of high yield ETFs (+$1.5 billion). ).
While conventional fund (-$4.4 billion) and ETF (-$3.5 billion) investors were net redeemers of equity funds for the week of fund flows, groups borrowed distinctly different paths in the universe of taxable bonds. In taxable bond ETFs (+$7.5 billion), investors filled the coffers of government treasury ETFs (+$5.3 billion), high-yield corporate ETFs (+$1.5 billion dollars), BBB-rated corporate debt ETFs (+$545 million), and flexible funds (+$392 million). However, in contrast, on the side of conventional funds (-$7.6 billion), investors were net redemptions of all macro groups but managed to inject a net amount of $43 million into the overall ranking US Treasury funds from Lipper for the week.
Investors reversed course on some of the most popular asset classes from 2021, with average equity and fixed income funds posting market declines of 18.81% and 8.50%, respectively , for the first half of 2022. The NASDAQ Composite and S&P 500 sealed their worst first half of the year since 1970, down 29.51% and 20.58%, respectively, with data showing falling consumer spending, inflation at its highest level in over 40 years and sluggish sentiment as consumers faced soaring food and energy costs.
Year-to-date through the week of fund flows ending July 6, 2022, investors were net buyers of conventional mutual funds and ETFs, withdrawing a preliminary net $299.3 billion. dollars. However, the theme outlined above has been in play for some time, with ETFs (+$239.9 billion) significantly outpacing their conventional fund counterparts (-$539.2 billion).
On the conventional equity fund side (-$107.0 billion), investors were net buyers of the other commodities macro group, injecting a net $4.4 billion since inception. of the year, followed by energy sector funds (+$1.5 billion), gold and natural resources funds (+$1.4 billion), income funds from stocks (+$947 million) and utility sector funds (+$469 million). However, the international equity funds macro group (-$25.5 billion) was the pariah of the conventional equity funds group, outperformed by global equity funds (-$21.7 billion) , small cap funds (-$17.6 billion) and large cap funds. (-$15.2 billion).
However, the carnage seen on the side of conventional equity funds has not been replicated by ETFs, which have attracted $168.0 billion net year-to-date. The main draws of investor assets were large cap ETFs (+$90.9 billion), equity income ETFs (+$45.3 billion), international equity funds (+32, $7 billion) and health/biotech ETFs (+$7.4 billion). As investors grapple with slowing global growth and rising interest rates and fears of an incipient recession, financial/banking sector ETFs (-$14.7bn) recorded the largest net outflows since the start of the year, outperformed by real estate ETFs (-$3.9 billion), energy sector ETFs (-$3.0 billion) and fixed income ETFs small cap (-$2.8 billion).
As the Federal Reserve raised its key rate by 75 basis points in June – its largest increase since 1994 and its third rate hike this year, investors fled many taxable fixed-income macro groups – remember the inverse relationship between bond yields and their prices.
Fixed-income mutual funds and conventional ETFs have returned some $109.4 billion so far this year, with their largest net outflows for any full calendar year dating back to 1992, when Lipper began tracking weekly streams.
However, the previously mentioned dichotomy continues, but to a lesser extent. Conventional taxable fixed-income mutual fund investors have redeemed a net $167.9 billion since the start of the year. The macro groups of conventional international and global debt funds (+$20.7 billion) and public treasury debt funds (+$9.3 billion) have been the only asset attractors for investors since the beginning of the year. However, the investor favorite from 2021 has seen the largest net redemptions so far this year, with investment grade corporate debt funds bringing in $110.6 billion, boosted by corporate funds high yield (-$27.1 billion) and flexible funds (-$22.0 billion) .
ETF investors have injected a net $58.5 billion into taxable bond ETFs so far this year, with Treasury ETFs (+$58.3 billion) attracting the biggest draw, followed by Investment Grade Debt ETFs (+$15.1B), International and Global Debt ETFs (+$3.2B), and Treasury and Mortgage ETFs (+$2.0B). dollars), while high-yield corporate ETFs (-$16.1 billion) and government mortgage ETFs (-$2.6 billion) saw the largest net redemptions.
Municipal debt funds and ETFs — collectively suffering an 8.24% market decline in the first half of the year — also saw net redemptions, returning $77.2 billion net, fund investors conventional repurchasing $90.5 billion net, while their ETF cohorts injected $13.4 billion. year to date.
Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.