ETF And Conventional Fund Investors Take Different Paths During The Fund-Flows Week

For the Lipper Refinitiv fund-flows week ended December 2, 2020, investors injected some $8.7 billion into U.S. mutual funds and ETFs. While COVID-19 vaccine news pushed ETF investors in the direction of more out-of-favor securities, the rise in coronavirus cases and hospitalizations kept many mutual fund investors in a risk-off mode.

For the fund-flows week, fund investors (ex-ETFs) were net redeemers of conventional equity funds, withdrawing $2.7 billion. As has been the long-term trend, large-cap funds witnessed the largest net redemptions (-$1.5 billion), bettered by international equity funds (-$574 million) and sector real estate funds (-$327 million).

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On the fixed-income side, conventional fund investors padded the coffers of taxable bond funds (+$4.9 billion), with corporate investment-grade bond funds (+$4.3 billion) attracting the lion’s share of net new money, followed by flexible funds (+$430 million) and international & global debt funds (+$289 million).

However, ETF investors appeared to be more risk-seeking, injecting a net $9.9 billion into equity ETFs during the week, with large-cap funds taking in $3.2 billion as some investors appeared to regain interest in some of the COVID-related “stay-at-home” stocks.

Meanwhile, others still appeared to focus on some of the out-of-favor issues, injecting net new money into international ETFs (+$1.8 billion), sector technology ETFs (+$1.7 billion), small-cap ETFs (+$1.5 billion), sector healthcare/biotech ETFs (+$960 million), and sector energy ETFs (+$453 million). A COVID-vaccine-related rally in oil prices in November was a boon for energy and natural resources funds, which continued through to the first few days of December.

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ETF investors were less sanguine when it came to taxable fixed income ETFs, withdrawing a net $792 million for the fund-flows week as Treasuries sold off at the long end of the curve and yields rose. While ETF investors continued to be net purchasers of corporate high-yield ETFs (+$513 million) and flexible funds (+$307 million), taking their collective foot off the pedal, they were net redeemers of corporate high-yield ETFs, withdrawing $1.1 billion for the week, and government Treasury ETFs (-$300 million).

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