Slowing Growth And Interest Rate Fears Weigh On Fund And ETF Investors In October

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Includes: AGG, BIL, EFA, EWJ, IVV, SPXU, SPY, SVXY, XLC, XLK
by: Tom Roseen
Summary

For the second consecutive month mutual fund investors were net redeemers of fund assets, withdrawing $28.7 billion from the conventional funds business for October.

For the first month in eight fixed income funds (-$20.4 billion for October, their largest monthly net outflows since December 2015) witnessed net outflows.

For the fourth month running authorized participants (APs) were net purchasers of ETFs, injecting $5.7 billion for October. APs were net purchasers of stock & mixed-asset ETFs (+$9.8 billion).

However, for the first month in 40 APs were net redeemers of fixed income ETFs (-$4.1 billion for October).

Picture Source: REUTERS/Brendan McDermid. A screen displays the Dow Jones Industrial Average after the close of trading on the floor of the New York Stock Exchange (NYSE) in New York, October 24, 2018.

For the second month in a row investors were net redeemers of mutual fund assets, withdrawing $28.7 billion from the conventional funds (ex-ETFs) business for October. Rising interest rates and fears of slowing global growth weighed on flows into long-term funds. For the first month in eight the fixed income funds macro-group witnessed net outflows, handing back $20.4 billion for the month. And for the sixth consecutive month stock & mixed-asset funds witnessed net outflows (-$42.1 billion for October, their largest monthly net outflows since November 2016), while money market funds (+$33.8 billion, for their third month of inflows in four) witnessed the only net inflows.

For the fourth month in a row ETFs overall witnessed net inflows, taking in $5.7 billion for October. Authorized participants (APs, those investors who actually create and redeem ETF shares) were net purchasers of stock & mixed-asset ETFs, adding $9.8 billion to the equity ETF coffers. However, for the first month in 40 they were net redeemers of bond ETFs—withdrawing $4.1 billion for October. APs were net purchasers of only two of the five equity-based ETF macro-classifications: USDE ETFs (+$15.2 billion) and World Equity ETFs (+$6.7 billion), while being net redeemers of Sector Equity ETFs (-$11.5 billion), Alternatives ETFs (-$455 million), and Mixed-Asset ETFs (-$199 million). In this segment I highlight the October fund-flow results for both types of investment vehicles.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.