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ETFs Continue Redemptions, but at a Slower Pace

Just received this information from yesterday’s Thomson Reuters Lipper report regarding fund inflows/outflows. It’s interesting to see which funds are being sold and which are attracting new money:

“For the second week in a row, equity ETFs witnessed net outflows; however, this past week they handed back just $100 million. Despite global growth concerns and a continued slide in oil prices, authorized participants (APs) were net purchasers of domestic equity ETFs (+$1.0 billion), injecting money into the group for the second week in three. With the global markets taking it on the chin during the week, especially in the banking sector, APs—for the fourth week in five—were net redeemers of nondomestic equity ETFs (-$1.1 billion). Perhaps as a result of some better-than-expected earnings news from U.S. firms and in anticipation of bottom shopping, APs kept their attention on some big-name ETFs, with SPDR S&P 500 ETF (+$3.1 billion), SPDR Dow Jones Industrial ETF (+$0.9 billion), and iShares MSCI USA Minimum Volatility ETF (+$0.5 billion) attracting the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum First Trust NYSE Arca Biotech ETF (-$833 million) experienced the largest net redemptions, while SDPR Financial Select Sector ETF (-$826 million) suffered the second largest redemptions for the week. For the ninth week in a row APs padded the coffers of government/Treasury funds, injecting $1.4 billion for the week.

Once again, for the fifth week in six, conventional fund (ex-ETF) investors were net redeemers of equity funds, redeeming $1.4 billion from the group. Domestic equity funds, handing back $3.1 billion, witnessed their thirteenth week in 14 of net outflows, while posting a weekly loss of 3.77%. Meanwhile, their nondomestic equity fund counterparts, posting a 3.25% negative return for the week, witnessed net inflows (+$1.7 billion) for the second consecutive week. On the domestic side investors lightened up on large-cap funds and mid-cap funds, redeeming a net $2.4 billion and $0.7 billion, respectively, for the week. On the nondomestic side global equity funds witnessed just $53 million of net inflows, while international equity funds attracted some $1.7 billion.

For the first week in 14 taxable bond funds (ex-ETFs) witnessed net inflows, taking in a little under $0.4 billion for the week. Government/mortgage funds witnessed the largest net inflows for the week, taking in $0.6 billion (for their fifth consecutive week of net inflows), while government-Treasury & mortgage funds witnessed the second largest net inflows (+$0.5 billion). Despite the Fed’s leaving the door open for a March rate hike, bank rate funds—handing back some $0.4 billion for the week—experienced their twenty-ninth consecutive week of net outflows. Becoming more risk averse during the week, investors were net redeemers of corporate high-yield funds (-$322 million), government/Treasury funds (-$200 million), and corporate investment-grade debt funds (-$153 million) for the week. For the nineteenth week in a row municipal bond funds (ex-ETFs) witnessed net inflows, taking in $816 million this past week.”

It looks like investors are staying conservative, holding onto broad market investments and government issues, while shying away from sector funds such as financials and biotechs. Food for thought, hmm?

Nancy Zambell has spent 30 years educating and helping individual investors navigate the minefields of the financial industry. She has created and/or written numerous investment publications, including UnDiscovered Stocks, UnTapped Opportunities, and Nancy Zambell’s Buried Treasures under $10. Nancy has worked with for many years as an editor and interviewer for their on-site video studios.