Equity, ETFs Expected to Attract $450B This Year

Equity mutual funds and ETFs aggregately attracted $60 billion in October, exceeding September’s net intake of $40 billion, according to Strategic Insight (SI), an Asset International company. “This is the year for stock mutual funds. Investor confidence continues to trigger higher stock fund flows, which are projected to top $450 billion—more than the prior four years combined,” says Avi Nachmany, Strategic Insight’s director of research.

SI research shows approximately $45 billion was net deposited into long-term stock and bond funds (including ETFs) in October, increasing year-to-date net intake to $404 billion. Since September 2008, investors have deposited a net $1.8 trillion into stock and bond mutual funds and ETFs, signifying the vehicles positioning as a core portfolio holding in wealth accumulation.

In addition, while bond mutual funds and ETFs overall experienced $15 billion of net redemptions in October, on a year-to-date basis demand remained positive through October at $12 billion. More than one-third of all individual bond funds have posted positive net flows over the trailing three months, after the spring’s interest rate increases. Taxable bond strategies leading inflows in recent months included floating rate, corporate short maturity, non-traditional/unconstrained, high yield, Global bond and strategic income.

U.S. equity funds, excluding ETFs, netted $31 billion in October, driven by near equal demand across domestic and international strategies. Research found flows' leading themes of 2013 include emerging markets equity, growth and income, and global asset allocation.

Including active and passive mutual funds (excluding ETFs), Vanguard, PIMCO and Fidelity led monthly net inflows across domestic and international equity strategies. BlackRock, Goldman Sachs and J.P. Morgan were the monthly flows leaders for bond fund flows during the month.

U.S. equity exchange-traded products (ETPs), including ETFs and exchange-traded notes, netted $29 billion during the month. Growth and income, mid cap equity, and international European equity were the top objective leading equity ETP flows in October.

Year to date through September, intermediary-sold channels (including private banks, independent, regional, registered investment advisers and most wirehouse broker/dealers) aggregately drove $211 billion of equity mutual fund and ETF inflows. During September, intermediaries captured $20 billion of equity flows, half of which were actively managed strategies. Among intermediary-sold actively managed equity funds, flows leading strategies through September included international growth, emerging markets, and global asset allocation.

The distribution channel data is attributed to Strategic Insight Simfund Pro, 7.0 / Access Data, a Broadridge company. Strategic Insight is a provider of mutual fund industry research and business intelligence. More information about the firm can be found here.