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Equity funds still positive despite market volatility

Tom Roseen
Tom Roseen
Director, Head of Lipper Research Services

Despite recent market volatility, figures from our Lipper data service show that year-to-date flows and returns for equity funds remain positive.

  1. Average equity fund return still 0.22 percent higher in first two months of 2018.
  2. Lipper chart shows a return in weekly fund inflows at end of February.
  3. Taxable bond funds attract a preliminary US$1.5 billion net for February.

In February, equity mutual funds (-4.07 percent) witnessed their first month of negative returns in 16.

This followed the early/mid-month market meltdown that was tagged by many pundits as having entered correction territory (a price decline of at least 10 percent from a recent market high).

However, year-to-date through to February 28, the average equity fund return (+0.22 percent) was still on the plus side and still up 15 percent for the one-year period.

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Domestic redemptions

For the month of February, Lipper’s Mixed-Asset Funds macro-classification (comprising primarily target-date and target-risk funds) mitigated losses (-2.98 percent) better than its U.S. Diversified Equity Funds (-3.61 percent), Sector Equity Funds (-5.0 percent) and World Equity Funds (-4.43 percent) counterparts.

Global fund flows
Global fund flows

In spite of the recent market losses, investors appeared to continue to embrace non-domestic equity funds, injecting US$16.9 billion net into the macro-group in February, while being net redeemers of domestic equity funds (-$34.4 billion).

However, for the year to date, estimated net flows into both groups remained on the plus side — $15 million and $57.3 billion respectively.

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Taxable bond funds

While fund investors were net redeemers of municipal bond funds (-$591 million) and money market funds (-$7.1 billion) for the fund-flows week ending February 28, they padded the coffers of equity funds (+$13.3 billion) and taxable bond funds (+$854 million).

Interestingly, in spite of the upward shift in the yield curve and increasing inflation concerns, taxable bond funds attracted a preliminary $1.5 billion net for the month of February.

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Net inflows into corporate investment-grade debt funds (+$10 billion) offset the net outflows from corporate high-yield debt funds (-$10.4 billion) and the net inflows into government treasury funds (+$5 billion).

That kept the tally in positive territory after accounting for net outflows from smaller groups.

Preliminary year-to-date figures showed taxable bond funds attracting some $41.7 billion net, with corporate investment-grade debt funds collecting the lion’s share of net new money (+$35.9 billion).

Discover more about Lipper, the global leader in independent fund performance data