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US Equities Continue to See Outflows on Slowing Growth

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Continuous outflows

In the week ending September 11, 2015, US equities saw total outflows of $1.59 billion—compared to outflows of $1.61 billion in the previous week. The rate of equity outflows remained flat due to investors pulling out funds on slowing global growth, higher US equity valuations, and falling manufacturing activity.

The US economy’s fundamentals improved with a lower unemployment rate, higher job openings, a rise in small business optimism, and a falling trade deficit. Mutual fund companies like American Funds, Vanguard, T. Rowe Price (TROW), and Janus Capital Group (JNS) would likely be negatively affected by a fall in investments.

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ETF investment outflows

The ETF market has fallen significantly to more than $3 trillion over the span of just a decade. US equities form more than 65% of the total allocation.

In the week ending September 11, the SPDR S&P 500 ETF (SPY), the PowerShares QQQ (QQQ), the iShares U.S. Real Estate (IYR), the Utilities Select SPDR (XLU), the iShares Core S&P 500 (IVV), the iShares 20+ Year Treasury Bond (TLT), the SPDR Gold (GLD), the SPDR Dow Jones Industrial Average Trust (DIA), and the SPDR Barclays Convertible Securities (CWB) saw a combined net outflow of $11.2 billion. Investors pulled money from real estate, gold, utilities, and index funds.

ETF investment inflows

ETFs that attracted investments during the week ending September 11 include the SPDR S&P Biotech (XBI), the SPDR S&P Retail (XRT), the SPDR S&P Pharmaceuticals (XPH), the Vanguard S&P 500 (VOO), the iShares Russell 2000 (IWM), the SPDR Morgan Stanley Technology (MTK), the iShares iBoxx $ High Yield Corporate Bond (HYG), the iShares Core U.S. Aggregate Bond (AGG), and the iShares iBoxx $ Investment Grade Corporate Bond (LQD). Together, these funds attracted $9.2 billion in investments.

Biotech, corporate bonds, retail, pharmaceutical, and technology attracted investments backed by macro factors. Asset managers like State Street (STT), Vanguard, and BlackRock (BLK) are major players in ETF offerings in the US, Europe, and Asia.

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