U.S. Weekly FundFlows Insight Report: Equity ETFs See Money Infusion As Mutual Fund Investors Withdraw Cash

For the fifth week in a row, investors were overall net redeemers of fund assets (including those of conventional funds and ETFs), withdrawing $21.8 billion for Refinitiv Lipper’s fund-flows week ended September 9, 2020. The topline number, however, is a little misleading. Fund investors were net purchasers of taxable fixed income funds (+$6.5 billion) and municipal bond funds (+$1.0 billion) while being net redeemers of equity funds (-$1.9 billion) and money market funds (-$27.4 billion) this week.

Market Wrap-Up

U.S. markets witnessed large declines during the fund-flows week after investors did a little profit-taking of FAANG and other stay-at-home stocks after their recent meteoric run, with the Dow Jones Industrial Average, S&P 500, and Nasdaq composite witnessing their largest one-day drops since June. During the fund-flows week, the Nasdaq experienced its fastest correction on record, but even that was erased on the last day of trading.

On the domestic side of the equation, the Nasdaq Composite Price Only Index (-7.59%) witnessed the largest declines for the fund-flows week of the broadly followed U.S. indices, while the Dow Jones Industrial Average Price Only Index (-3.99%) did the best job of mitigating losses of the group. Overseas, the Xetra DAX Total Return Index (-0.31%) mitigated losses better than the other often-followed broad-based global indices, while the Shanghai Composite Price Only Index (-4.69%) suffered the largest decline.

On Thursday, September 3, technology and other high-flying stay-at-home stocks were pummeled as investors questioned the sustainability of the recent stock market record highs and Congress’ ability to strike a deal on another round of economic relief. On Friday, September 4, the market darlings of late continued their decline as investors continued to take profits off the table ahead of the three-day Labor Day holiday despite learning that the U.S. economy regained 1.4 million jobs in August and the unemployment rate declined to 8.4%, beating analyst expectations. While near-month crude oil futures declined based on withering market demand, gold futures also suffered losses for the third straight day.

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