I’m not sure I’d call it an “en masse cash-out” — as one mainstream financial media outlet loudly declared — but investors did pull a meaningful amount from stock funds over the past two weeks.
Typically I don’t trumpet weekly flows data, preferring instead to pen short updates for the narrower audience who’s interested in the ebb and… well, the ebb and flow. But in light of equities’ worst run since the onset of the rally in October, it’s worth giving the numbers something more than short shrift.
The figure below shows the regional breakdown of global equity flows in 2024.
Equity-focused ETFs and mutual funds saw nearly $29 billion in redemptions on net over the past two weeks, a stretch during which global equities fell 4.4%.
Those redemptions trimmed the YTD net inflow to a little over $127 billion. It’s important to note that underneath the surface, these flows reflect the ongoing active-to-passive shift or at least investors’ preference for ETFs versus mutual funds. The $127 billion figure, for example, is $268 billion to ETFs and $141 billion from mutual funds.
US equity funds lost $21 billion over the past two weeks, indicative of the angst which pushed the S&P more than 5% lower from record highs reached late last month.
YTD, US stock funds have seen a net $61.2 billion of inflows, accounting for around half of the total globally. The under-the-hood breakdown for US funds is $135 billion to ETFs and $73.6 billion from mutual funds.
Note that Japanese shares saw inflows in 13 of 2024’s first 14 weeks as the Nikkei stormed to its first record high in decades. Over the last two weeks, though, Japanese shares saw consecutive outflows totaling $2 billion.
European shares are mired in a seemingly never-ending run of redemptions which extended into a 16th week through April 18.
Suffice to say investors aren’t enamored with the outlook for Europe. Either that, or every alternative is viewed as more attractive. That may be a distinction without a difference.
To a certain extent, equities are a sideshow in 2024 from a flows perspective even if stock funds are still annualizing a very large haul. Money market funds and IG credit continue to attract attention commensurate with the assets they’ve attracted.
Forgetting this week’s tax-related outflows, money market funds have seen more than $300 billion of inflows in 2024. That is: Before $160 billion hit the exits for tax payments over the last week, money funds had gathered $313 billion over just three and a half months, or roughly 3.5% of AUM.
2024’s influx would be remarkable enough on its own, but it’s made even more so in light of how much money piled into MMFs in 2023 ($1.35 trillion).
As for high grade credit funds, this week’s $3.8 billion haul was the 25th consecutive.
I appreciate your caution on reporting these numbers. A long time ago (20 years…) these were almost the most important things I watched. (As JL said, fundamentals schmudimentals or something.) But as time passed, ETF flow data included hedge funds which still was interesting. And in terms of absolute dollar flows, buy0backs came to eclipse those flows.
But now, how much of the numbers are CTA funds and volatility-driven algos? The latter probably still operate through the S&P futures, but perhaps there is some spillover?
Anyway, still interesting, but to continue to label these flows as being “retail” money is hopelessly out of date.
@derek, have you read any CTA info? I saw something about very sizeable CTA selling expected in coming weeks (Goldman note I think)
Sorry, I have not. But it makes sense thar some trend following or momentum models might be close to flipping. But many do not appear to be so sensitive to shorter-term moves.
I just meant that I normally confine the flows updates to the Duly Noted section because a lot of times there’s no real “hook,” so to speak. It’s more like, “Well, here’s these numbers if you’re interested.” Duly Noted morphed into something a little different than I originally intended when I created the two-tiered system last year, but as originally envisioned, the idea was to use that section as an overflow valve and a place for stuff like flows data.