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Thursday, March 05, 2020

Retail Investors Flinch, But ...

News summary by MFWire's editors

It looks like mutual fund and ETF investors are not rushing to the exits as fast as one might fear, at least according to preliminary data. Last week was the worst week for U.S. stocks since 2008. Yet fund flows weren't as bad as you might think.

Paul Schott Stevens
Investment Company Institute
President, CEO
Yesterday the Investment Company Institute (ICI) team revealed estimates that, for the week ended February 26, U.S. equity funds suffered $3.39 billion in net outflows, while U.S. equity ETFs suffered "negative net issuance" (i.e. net outflows) of $10.15 billion. As pointed out by Reuters, that only makes February 20-26 the worst U.S. equity fund flows week since September 2019, not the worst one in years or more than a decade.(However, since ICI's data is Thursday to Wednesday, not Monday to Friday, we have not seen how bad Thursday and Friday flows were last week.)

Oh, and according to ICI's estimates, combined long-term mutual fund and ETF net outflows for the week ending February 26 total to $11.86 billion.

Meanwhile, ETF.com reports that, despite February ending on a rough note (last week was also the last week of the month), ETFs in the U.S. still brought in $21.2 billion in net inflows for the full month (with fixed income ETFs leading the charge).

Maybe the so-called "dumb money" of retail investors (who, through financial advisors and retirement plans, are the big users of mutual funds and ETFs) is finally learning some long-term investing lessons, or maybe inertia's power over such investors is becoming even stronger, or both? 

Edited by: Neil Anderson, Managing Editor

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