Equity Investment Continues Amid Market Jump

Strategic Insight’s monthly fund flow report for November 2016 shows active and passive strategies continued to experience divergent trends in net investments.

Passive funds led demand with $67.7 billion of inflows (including $49.4 billion to exchange-traded products), while actively managed funds experienced aggregate net redemptions of $63.9 billion in November.

During the month, domestic equity funds saw the strongest demand among long-term funds, attracting net inflows of $21.1 billion. This segment has experienced net outflows of $39.5 billion in the year-to-date period through November, however. International equity funds saw net redemptions in November ($4.8 billion) and the year-to-date period ($19.2 billion).

Regarding taxable bond funds, Strategic Insight says they experienced outflows of $1.8 billion in November, while tax-free bond funds saw outflows of $10.7 billion. Strikingly, November represents the only month in 2016 that tax-free bond funds experienced net redemptions, while taxable bond funds have only seen outflows in January and November of 2016.

Money market funds experienced a significant increase in net deposits to $54.8 billion in November from $6.0 billion in October. Taxable money market funds, in particular, were responsible for most of this increase with net inflows of $53.0 billion.

Strategic Insight concludes the biggest difference in November from the rest of 2016 was that prime money market funds experienced moderate inflows ($220 million). The segment had seen significant net redemptions throughout 2016 because of pending regulation which ultimately came into effect in October.

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