While the year-to-date trend in domestic equity mutual fund flow is much improved, U.S. stock funds posted their second consecutive weekly outflow as investor’s pulled money out of actively managed stock mutual funds.
The Investment Company Institute (ICI) has reported that domestic equity mutual funds had their second consecutive weekly outflow last week in the period ending March 6th. Domestic mutual funds, outlined as mutual funds that actively invest in the U.S. equity market, experienced $578 million in investor redemptions. This was the second consecutive week of outflows for domestic stock funds that has now totaled over $1.7 billion. The broader trend is still incrementally positive, however, with the first nine weeks of 2013 having had 7 weeks of positive inflow and just 2 weeks of redemptions or outflow.
This improved environment to start 2013 has been assisted by lower correlations in the S&P 500 (see our article addressing lower correlation) and the continued improvement in the U.S. labor markets (we outline our research on improving U.S. labor conditions). Year-to-date, the $20.3 billion inflow into domestic stock funds compares to the $4.2 billion in outflows during the first nine weeks of 2012. In fact, the current year-to-date inflow by stock fund investors is 37% better than the $14.8 billion that came into funds to start 2011 and is a far cry from the large outflows which marked 2008-2010 to start those years.
The public asset managers who benefit the most from an improved domestic stock fund flow environment include Janus Capital (JNS), T Rowe Price (TROW), and Legg Mason (LM).