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So Much For That "Record Inflow" Into Equity Funds - Domestic Equities See $4.2 Billion Outflow In Most Recent Week

Tyler Durden's picture




 

The most talked about story of the last week was undoubtedly the relentless chatter about that massive $18 billion in equity fund inflows as reported by Lipper (not ICI), which tracks primarily institutional and ETF flow of funds, and which, as we explained even before the Lipper data came out, was driven exclusively by a surge in bank deposits into the year end, to be recycled for risk investment purposes by the commercial banks' own prop desks. The details, however, were largely ignored by the mainstream media which took that inflow as an indication that the tide has finally turned and that the great rotation out of bonds into stocks is on. Turns out that just as we expected it was a year end calendar asset rebalancing. As Lipper reported earlier, the enthusiasm for US stocks appears to have abruptly ended, with a whopping $4.2 billion pumped out of domestic equities, offset by some $4.5 billion invested in non-domestic equities. The blended flow? Just $286 million going into equities. Now our math may be a little rusty, but $18 billion followed by $0.2 is not really indicative of an ongoing rotation out of bonds and into stocks, and is more indicative of a one-time, non-recurring event, just the opposite of all the Bank of America addbacks.

To summarize:

Sector                             Flow     Chg  %        Assets     Count
                                     ($Bil)    Assets 

 All Equity Funds              0.286      0.01     3,042.918  10,145
 Domestic Equities           -4.181    -0.19     2,255.468   7,523
 Non-Domestic Equities     4.467      0.57     787.450     2,622
 All Taxable Bond Funds    4.625      0.30     1,531.942  4,824
 All Money Market Funds   -9.603    -0.40     2,402.327   1,363
 All Municipal Bond Funds   1.443     0.45     324.824     1,348

From Reuters:

When combined, the sizeable inflows into stock mutual funds and the big outflows from stock ETFs produce a total figure of just $286 million into equity funds overall, which is sharply lower than the previous week's total inflow of $18.32 billion, which was the most net new cash into equity funds since 2008.

 

The S&P 500 rose a slight 0.8 percent over the reporting period. Federal Reserve Presidents James Bullard, Charles Plosser and Charles Evans voiced their optimism about U.S. growth for 2013, while upbeat U.S. retail sales for December and strong corporate earnings for major banks JPMorgan Chase  and Goldman Sachs also boosted markets.

 

Investors remained cautious, however, in light of Republican opposition in Congress to increase the $16.4 trillion U.S. debt ceiling. A failure to raise the government's borrowing limit could cause the United States to default on its debt in coming months.

 

With regard to the $3.75 billion inflow into stock mutual funds, those that specialize in U.S. stocks attracted $1.41 billion of that sum, while mutual funds that hold international stocks attracted the remaining $2.34 billion.

 

The enthusiasm for stock mutual funds did not apply to stock ETFs, which suffered outflows of $3.5 billion. The outflows are the first losses for the funds in eight weeks, and mark a reversal from the previous week's big gains of $10.78 billion. Investors turned particularly cold toward the SPDR S&P 500 ETF fund,  from which they pulled $4.21 billion.

Sadly for the prepared talking points, the flows into bond funds are back.

Investors in bond funds favored higher quality and gave $2.02 billion to investment-grade corporate bond funds. The figure represents the total amount pumped into both mutual funds and ETFs that hold investment-grade bonds.

 

Lemieux of Lipper said that consistent inflows into investment-grade corporate bond funds show that investors are still opting for some safety.

 

High-yield "junk" bond funds attracted just $571 million overall, indicating the decreased appetite for risky bonds compared with the previous week, when the funds attracted $1.11 billion in new cash.

We, for one, can't wait to see how much non discussion this latest weekly fund flow update gets on the mainstream financial media, or whether last week's flow aberation will be locked in time and referred to by the pundits on an ongoing basis indefinitely

 

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Fri, 01/18/2013 - 08:27 | 3165630 GetZeeGold
GetZeeGold's picture

 

 

Dammit.....who keeps putting holes in our bucket?

Fri, 01/18/2013 - 08:32 | 3165635 kralizec
kralizec's picture

Mostly people with pots of gold.  ;)

Fri, 01/18/2013 - 08:43 | 3165650 beentheredonethat
beentheredonethat's picture

Tax selling in dec followed by jan rebuy. Money supply up 2% in December as well, flow into jan stock. Very complex.

Fri, 01/18/2013 - 08:45 | 3165653 PUD
PUD's picture

Money in=market up

Money out=market down

Does not get more simple than that

Parse it as you wish, imply what you like but those 2 basic equations will always be true

Fri, 01/18/2013 - 08:53 | 3165673 Colonel Klink
Colonel Klink's picture

Yeah something like that.  Except it's private money out, Fed money to pump it back up.

Fri, 01/18/2013 - 09:35 | 3165723 LawsofPhysics
LawsofPhysics's picture

Bingo.  Besides, perhaps one should define what "money" is and what the purpose of having a real fucking market is.  This idiot has obviously never heard of the term price discovery.  There is no "market" on Wall Street, it's a casio and the house keeps getting bailed out.

Fri, 01/18/2013 - 12:28 | 3166418 ltsgt1
ltsgt1's picture

I think the house is the market right now.

Fri, 01/18/2013 - 12:28 | 3166419 ltsgt1
ltsgt1's picture

I think the house is the market right now.

Fri, 01/18/2013 - 12:28 | 3166420 ltsgt1
ltsgt1's picture

I think the house is the market right now.

Fri, 01/18/2013 - 12:28 | 3166421 ltsgt1
ltsgt1's picture

I think the house is the market right now.

Fri, 01/18/2013 - 12:47 | 3166493 Colonel Klink
Colonel Klink's picture

You can say that again...

Fri, 01/18/2013 - 12:47 | 3166494 Colonel Klink
Colonel Klink's picture

You can say that again...

Fri, 01/18/2013 - 08:54 | 3165675 Downtoolong
Downtoolong's picture

There will never be another down day in the market. Let it be written, let it be done.

Ben.

 

Fri, 01/18/2013 - 08:59 | 3165678 GetZeeGold
GetZeeGold's picture

 

 

From the book of 2nd Nebakanezer 1:15.

Fri, 01/18/2013 - 09:00 | 3165681 Northeaster
Northeaster's picture

Isn't this just reflective of what The Fed is doing (i.e. front-running)? If you know where the pixie dust is being sprinkled it makes sense to go there. Most of what I have read is that everything is way oversold and people are in cash waiting for a large correction. If someone has a different theory, chime in.

Fri, 01/18/2013 - 09:07 | 3165687 rsnoble
rsnoble's picture

In case you didn't know.........some big participants don't want you in the markets because it will rise faster with fewer in it.  That way all the big banks will own all the overpriced garbage for themselves and make them look good.  Of course who they will sell it to is unkown, and who will give in first freaking out is also unkown.

Other thoughts.......notice we were going to have bad earnings reports and it's been nothing but glorious news so far?(granted they haven't been that great) just Wallstreet killing off the last bit of trust that's left.

It seems all this craziness is tied in with the Doomsday Clock sitting at 5 till midnight. Meaning no, we can't just try surviving if it all goes to hell we have to blow ourselves up.

Fri, 01/18/2013 - 09:15 | 3165697 francis_sawyer
francis_sawyer's picture

 "That way all the big banks will own all the overpriced garbage for themselves and make them look good. Of course who they will sell it to is unkown, and who will give in first freaking out is also unkown."

~~~

They will SELL to the brainbug of that mysterious paper debt money system [that prints itself], which will, in turn, cause a raise in the price of catfood [and therefore makes GRANNY the de-facto buyer]...

Fri, 01/18/2013 - 09:39 | 3165744 venturen
venturen's picture

Money for everyone...but where are the chicks for free?

Fri, 01/18/2013 - 09:44 | 3165758 madcows
madcows's picture

You got the lyrics wrong.  It's "Money from nothing, Dicks for free.  I want my.  I want my.  I want my EBT!"

Fri, 01/18/2013 - 18:54 | 3167774 SDRII
SDRII's picture

And of course Fink will be the top of the rolodex for the incoming TreasSec also. He was Geithners goto. They will discuss the difference between synthetic ETFs (AKA Made in USA) vs. the evolution to Physical ETFs in Europe.

http://www.ft.com/cms/s/0/c040b89e-2f44-11e2-8e4b-00144feabdc0.html#axzz...

Both Deutsche Bank and Lyxor Asset Management, the second- and third-largest ETF managers in Europe, are launching “physical” ETFs that buy the constituents of an underlying index, – a departure from their existing range of “synthetic” ETFs that use derivatives to track a benchmark.

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