A Closer Look At October Flows: Where Did the Money Market Assets Go?
Without question, the biggest story of this month’s fund flow data is that $33.3B departed from Money Market funds in October, marking the first time this year that this category has seen net negative flows.
Immediately, what jumps out is that all but one broad category had negative flows, so to better understand what happened in October, YCharts took out our magnifying glass.
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Passive Vs Active Fund Flows in October
Before diving into category flows, checking in on the age-old passive vs. active flow discussion shows that despite passive funds attracting $19B and active funds losing $33B, passive ETFs ($16.96B) narrowly edged out active ETFs ($16.37B) in inflows in October.
Looking closer at the divide between passive and active ETFs, active fixed-income ETFs brought in $5.78B in October. As fixed income becomes more attractive to advisors in today’s environment, this is a trend to watch to determine if advisors are finding value in an active strategy regarding the fixed-income sleeve of their client’s portfolios.
Back to the original question of where the assets from money market funds went, most would immediately look to fixed funds despite the category seeing $16.95B depart in October. With treasury yields nearing 15-year highs across various durations, several fixed-income products became more attractive in October.
On the equity side, only Large Blend, Growth, and Small Cap Value ETFs had net positive flows in October. Considering the stories for Large Blend and Growth have been established for the year, let’s see what’s happening in the small cap value world.
For starters, small-caps, in general, are presenting an intriguing opportunity as the Russell 2000, represented by the iShares Russell 2000 ETF (IWM), is 26.6% off its all-time high, while the S&P 500, represented by the Vanguard S&P 500 ETF (VOO), is 5.2% off its ATH. So, there could be a sense among investors that small caps have already felt their fair share of pain from a rapid rise in interest rates over the past 18 months, and there could be a rally in store for the smallest names in the market.
These ETFs Celebrated their 5th Inception Anniversary
The fifth anniversary of an ETF is a special one. It allows the asset manager to highlight the longer-term performance of their strategy, and more importantly, it could mean that more advisors have access to investing in a particular fund.
These ETFs had an inception date between 9/28/2018 (a Friday) and 10/31/2018. Here’s how they’re doing.
SPDR® Kensho Clean Power ETF (CNRG), VanEck Vdo Gaming and eSprts ETF (ESPO), and Distillate US Fdmtl Stblty & Val ETF (DSTL) are leading the clubhouse with 17.6%, 13.5%, and 13% annualized five-year total returns (monthly), respectively.
Meanwhile, iShares ESG U.S. Aggregate Bond ETF (EAGG) is leading the way with $1.2B in inflows year-to-date.
Let the trend be your friend, whether strategizing for ETF assets conversion or capitalizing on inflows into Government Bond funds. Being well-informed empowers your conversations with advisors, offering them current and relevant market insights.
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