Exodus from Stock Mutual Funds Continues; ETFs See Inflows

October 14th at 1:08pm by Tom Lydon

U.S. equity mutual funds continue to bleed outflows at a rapid pace, but investors keep putting money into exchange traded funds this year.

Individual investors are engaging in some “extreme selling” as U.S. stock mutual funds experienced $94.7 billion in redemptions over the four months through September, according to investment-research firm TrimTabs, reports Robert Holmes for TheStreet. In comparison, mutual funds saw $162 billion in outflows in 2008.

Additionally, global funds lost $9 billion from the start of June until the end of August, the heaviest outflows in over two years. Global equity funds have plummeted 15.4% year-to-date compared to the 9.6% drop in the average domestic fund.

According to Morningstar, U.S. equity mutual funds saw $6.9 billion in outflows in September while U.S. ETFs tacked on $4.1 billion. Year to date, ETFs have seen net inflows of about $77 billion. [ETF Assets Gain Ground as Some Hedge Funds Flounder]

“U.S. ETFs have realized only a single month’s worth of outflows in the last year,” Morningstar ETF analyst Abraham S.H. Bailin said in a research note.

TrimTabs argues that the money is finding its way into ETFs, noting that the pervasive withdrawal from mutual funds for ETFs is “the theme of the year.” The research firm points out that U.S. equity mutual funds saw net outflows of $73.4 billion, whereas U.S. equity ETFs brought in $17.3 billion. [ETF Flows Hold Up as Investors Flee Stock Mutual Funds]

For more information on mutual funds, visit our mutual funds category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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