Sep 24, 2020 - Economy & Business

Equity outflows speed up

Data: Investment Company Institute; Chart: Axios Visuals
Data: Investment Company Institute; Chart: Axios Visuals

One paradox of the recent bull-market run is that it has taken place in the face of consistent selling by investors in ETFs and mutual funds.

The big picture: Monthly flows from actively-managed stock-market funds have been negative for years, and while flows into passively-managed funds have been positive, they have generally been smaller.

Driving the news: Now, even passively-managed mutual funds and ETFs are seeing outflows. Data from the Investment Company Institute show about $17 billion per month leaving passive strategies in the past three months — something that has never happened before.

  • One possible explanation: A lot of passively-invested money is in target-date funds that periodically rebalance. The stock market rally could have forced those funds to sell some equities, just to keep their total stock-market allocation at the target percentage.
Go deeper