What does the current data show?

The growth of equity ETFs did offset stock mutual fund losses through the end of 2014. However, net outflows from all stock funds increased to $96 billion in 2015 and are on pace for about the same rate in 2016. All of the net outflows are in U.S. domestic stock funds, while world funds have continued to attract new money.
In 2016, money has been gushing from U.S. stock funds into bond funds. Total net inflows to bond mutual funds and ETFs are averaging about $20 billion per month.

Several trends suggested by this data may be important for helping clients achieve financial goals – especially if the current trends continue. For example:

Baby Boomers are retiring in droves and downshifting risk by moving money from stock to bond funds. Also, Millennials are starting to invest, and many don't seem to have much appetite for equities.
Investors of all ages suffered portfolio damage in the 2008-09 stock market crash, and the memory may be hard to shake. Some fund investors may have lost confidence in the U.S. stock market, in part because they think it's rigged in favor of high-frequency traders. Perhaps they also feel there are better economic growth prospects abroad than in the U.S.

If the combined fund flows data continues to show net outflows from U.S. stock funds, it doesn't mean the U.S. stock market will decline. It's possible stock market indexes could be maintained at current levels by demand from pension funds, hedge funds, stock buy-backs, prop trading desks and central banks.

Instant Insights /

Help clients monitor combined mutual fund-ETF flows and trends

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