Saturday, March 03, 2012

Investor Equity Fund Flows Indicate They May Be Late To The Rally

Mutual fund flow data appears to indicate investors have been late to allocate additional funds to equities in spite of the strong equity market advance since the end of September last year. As the blue bar in the below chart indicates, monthly net flows into equity mutual funds has been negative in spite of the continued advance in the market.

From The Blog of HORAN Capital Advisors

The below chart shows the same data with flows accumulated on a rolling one year basis. Historically, when equity flows have been negative, the equity market returns have not been favorable. During this most recent period though, equity returns have been extremely strong in the face of the negative equity fund flows.

From The Blog of HORAN Capital Advisors

Not until this past month have equity fund flows turned positive. The biggest beneficiary of flows though has been fixed and money market funds.

From The Blog of HORAN Capital Advisors
Source: ICI

From The Blog of HORAN Capital Advisors

From a contrarian standpoint, and taking into account only the fund flow data, investors don't seem to have thrown in the towel and piled into equities.Maybe this market continues to climb the proverbial "wall of worry" until we see investors capitulate and plow into equities.


Anonymous said...

Are these data including ETF? Big shift mutual funds => ETF ......

David Templeton, CFA said...

The data in this post does not include ETF asset flows. I will try and pull together some of that analysis this week. Below is information on ETF flow data.