Earlier this week the Investment Company Institute (ICI) reported mutual fund flows for the week ending April 24. The results were grim for the equity mutual fund industry, as they have been for a very long time. In the chart below we show dollar flows by mutual fund type across a variety of time periods. Notably, equity funds are extremely weak across almost all fund types, with emerging markets equity funds the only exception. The complete opposite is true of bond mutual funds. While equity funds saw outflows of $13.9bn over the course of the week, bond funds saw inflows of more than $10bn, driven by investment grade bonds. Start a two-week free trial to Bespoke Premium to access our interactive economic indicators monitor and much more.
Arbitrary large dollar numbers can be a bit hard to get a grasp of, so we also like to look at fund flows on a percentile basis, comparing their size to historical ranges. Higher numbers indicate larger fund inflows, or smaller outflows, while lower numbers indicate larger fund outflows or smaller fund inflows. This table ultimately tells the same story as the table above: very large outflows relative to history for equities, very large inflows relative to history for bonds. As with EM equities, there are exceptions to the bond inflow story: high yield has been relatively weak persistently of late. But generally speaking, fund inflows to bonds have been very large for a while now.
In the chart below we show cumulative fund flows for all US mutual funds, all equity mutual funds, and all bond funds. As shown, while equity fund flows haven’t been universally negative since 2007 (2013-2015 saw notable inflows), the general trend has been the same for the past decade and counting: redemptions from equity funds, buying of bond funds.