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Money Funds, Stock ETFs Inundated In 2024 Flow Bonanza
Meanwhile, on the flows front.
US money market funds just saw one of their largest weekly inflows on record, a monumental $120.80 billion in the week to September 26.
The enormous influx followed a rare outflow which coincided with a corporate tax date.
As you can imagine, the vast majority -- $110 billion -- was attributable to the institutional government category.
The mountain of cash parked in US money funds now stands $6.42 trillion tall.
For context -- and as the figure shows -- las
There seems to be a trend in these numbers. Is money regularly coming out of mutual funds because people are starting to draw on their IRAs en masse–or something like that–or is there an actual rotation going on out of mutual funds and into ETFs (and if so, why?)
Ha, it’s a trend all right. In fact, it’s an epochal trend. In some respects it’s the only trend that matters. And no, it has nothing to with retirement funds. It’s the active-to-passive shift. Nobody wants to pay 100bps to an active manager when you can pay 5bps to track benchmarks that never fall.
Here’s what that trend looks like on a longer horizon: https://heisenbergreport.com/wp-content/uploads/2024/08/ActiveVsPassiveBofAAug2024.png
Again: Epochal.
I’m not clear what advantage MF have over ETF. They are functionally the same for the customer, except that ETFs trade like water and don’t stick you with a big year-end tax bill.