U.S. Weekly FundFlows Insight Report: Net Outflows From Equity Funds Drive The U.S. Fund Universe To Seventh Straight Net Negative Result

Refinitiv Lipper’s fund asset groups (including both mutual funds and ETFs) had net outflows of $16.0 billion for the fund-flows trading week ended Wednesday, September 23. Funds have now seen net money leave for seven consecutive weeks during which time their coffers have shrunk by $133.7 billion. In this week’s activity, equity funds (-$14.9 billion) were responsible for the lion’s share of the net outflows, while money market funds contributed $2.7 billion to the total net negative flows. Equity funds have now seen money leave for six straight weeks while money market funds ran their losing streak to nine weeks. On the plus side of the ledger, taxable bond funds (+$1.1 billion) and municipal bond funds (+$499 million) both took in net new money.

Market Overview

The equity indices all suffered significant losses during the fund-flows trading week as the Dow Jones Industrial Average, S&P 500 Index, and the Nasdaq Composite Index lost 4.5%, 4.4%, and 3.5%, respectively.

It was a mostly dour week for the equity markets as all three indices posted losses in four out of five trading days. After starting the trading week with three consecutive daily losses (weighed down by continued COVID-19 concerns, lack of an additional stimulus package, and choppy economic data), the markets rebounded on Tuesday, September 22. The equity indices all posted gains that day due in part to the Congressional testimony of Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell. Both economic officials reiterated that the emergency measures enacted by the Federal Reserve were working as anticipated. But they also warned that they believed they had exhausted all of the tools in their toolbox and an additional fiscal stimulus package was needed from the government to sustain the economic recovery.

This momentum did not carry through to Wednesday as the Nasdaq Composite, S&P 500, and the Dow fell 2.7%, 2.4%, and 1.9%. Stocks faltered in the second half of the trading day as it became apparent that the additional fiscal stimulus package will most likely be lost (at least in the near-term) to the political infighting overfilling the vacant Supreme Court seat that was created by the passing of Supreme Court Justice Ruth Bader Ginsburg.

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Moon Kil Woong 3 weeks ago Contributor's comment

Presidential gossip about suspending votes for whole states, if not stacking the Supreme court to negate the election and let the court decide is a destabilizing force. Just suggesting an unstable change of power undermines the US in shameful ways. To think this doesn't affect the market is naive. Worse yet, if this occurs the Constitution will have Nancy Pelosi to take Trump's seat until this is all resolved, which is destabilizing as well.

As it is now, The market will breathe a big sigh of relief no matter who wins this election. Moderation and Predictability are the market's friend. Anything else, no matter who proposes it, is not.

Kurt Benson 3 weeks ago Member's comment

Eloquently put.