ETFs continue to take in assets while U.S. stock mutual funds see money move out the door.
“Financial advisers love ETFs, partly because they tend to be more predictable and tax-efficient than mutual funds, partly because the lower fees on ETFs remove some of the pressure that advisers might otherwise feel to cut their own fees. Naturally, financial advisers are counseling their clients to shift from mutual funds to ETFs,” Jason Zweig wrote on The WSJ. [Why the Retail Investor is Checked Out]
The Investment Company Institute recorded that net redemptions from U.S. stock mutual funds have totaled roughly $68 billion. In comparison, U.S. stock ETFs have gained $22.5 billion in net inflows, reports Zweig. Overall, the trend is showing investors are shying away from U.S. stocks, but what is flowing in is not all exchanges. [End of Summer Pullback For S&P 500 ETF?]
When investors take out more capital than they have put into a fund, it’s called a net outflow or net redemption. When investors put in more than they take out, that’s called a “net inflow” or “net purchase. ”If you take the “exchange”money out of the equation, the total drops to less than $46 billion. [ETFs are Top Holdings in Some Mutual Funds]
Also, if you throw in the net inflows that both mutual funds and ETFs focusing on international markets have attracted so far this year, the overall net redemptions from stock funds shrink to just about zero.
Tisha Guerrero 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.