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Domestic stock fund flows go negative to finish the first quarter

Domestic equity 04.12.2013Enlarge GraphThe Investment Company Institute (ICI), the trade association for the asset management industry, has reported that U.S. stock mutual fund flows were negative in the final week of March to close the first quarter. Despite the lackluster quarterly finish, year-to-date equity fund flow trends are the best in five years as retail investors look to capture higher stock market returns.

For the week ending April 3rd, the ICI reported that $1.8 billion was redeemed from (or flowed out of) domestic equity mutual funds. The ICI survey represents at least 95% of all the U.S. domiciled mutual fund families that report their net inflow or net outflow on a weekly basis. The most recent week’s outflow was the largest outflow of 2013, which has only seen two other negative weeks. The other two negative weekly flows in 2013 were the $1.1 billion pulled out of funds for the week ending February 27th and the following week ending March 3rd, which saw $571 million redeemed from stock funds. The important intermediate 12 week moving average is now $1.1 billion per week, reflecting the broadly modest positive inflow trends that have marked domestic equity funds for 2013.

YTD domestic equity 04.12.2013Enlarge Graph

The year-to-date trends are substantially better than the equivalent 12 week periods over the past 5 years. Thus far in 2013, all weeks for the domestic stock category have now totaled over $21.0 billion. This is a well improved statistic versus the $16.9 billion that was yanked from stock funds during the same time period last year in 2012. The years of 2008-2010 were also negative through the first quarter, to the tune of $41.0 billion, $27.2 billion, and $2.7 billion, respectively. The only other year that had positive inflow through the first quarter was 2011, which had a modest $9.5 billion in new money deposited into domestic stock funds.

The ICI trends in the domestic equity category are important for the leading U.S. stock fund managers, including T Rowe Price (TROW), Janus Capital (JNS), and Invesco (IVZ).