Informa Intelligence
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Investors Flee U.S. Equity ETFs in Record Numbers

While global equity ETFs continue to draw big inflows despite steep losses over the first five trading days of February, there is no such optimism among investors for U.S. equity ETFs.

We continue to observe tremendous complacency on non-U.S. equities and advise contrarians to consider favoring U.S. equities now.

Global equity ETFs are continuing to draw big inflows despite steep losses. They issued $700 million (0.09 percent of assets) on Tuesday and $1.0 billion (0.1percent of assets) on Wednesday. On the first five trading days of February, they issued $1.2 billion (0.2 percent of assets) even though they plunged 5.5percent. Emerging markets, Europe, and Japan-focused funds all had inflows on Tuesday and Wednesday and have had positive flows month-to-date.

There is no such optimism on U.S. stocks. U.S. equity ETFs had outflows on each of the first five trading days of February totaling $23.2 billion (1.2 percent of assets), the biggest five-day outflow in our records. U.S. equity funds’ 5.4 percent loss in February is almost identical to the loss of their non-U.S.-focused counterparts.

 

Mutual fund investors, most of whom are individual investors, have also favored non-U.S. equities over U.S. equities amid the sell-off, but this tilt is nothing new, and overall flows are not indicative of panic. We estimate, based on the funds we track daily, that U.S. equity mutual funds shed $13.9 billion on the first five trading days of February, while global equity funds lost only $1.4 billion.

David Santschi is the director of liquidity research at TrimTabs Investment Research, an Informa Financial Intelligence company. 

TAGS: Mutual Funds
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