In the first quarter of 2023, exchange-traded funds (ETFs) saw outflows for the first time since 2020. But money flows move fast. The second quarter tells a different story. Equities markets have become less volatile, sentiment has improved and fixed income (FI) continues to benefit from higher interest rates. In the Q3 U.S. Distribution Pulse Quarterly webinar, we share data and analysis showing investors are coming back from the sidelines. With this movement, ETFs are once again picking up share.
As 2023 has progressed, BNY Mellon Growth DynamicsSM data is showing the consistent pattern of mutual fund outflows and ETF inflows has returned.
As we observed in “Signs of a Turning Tide (U.S. Distribution Pulse Quarterly | 2Q 2023),” market uncertainties began to favor mutual funds. However, equities have experienced a rapid recovery. For example, the S&P 500 rose from a March 10, 2023 low of 3861.59 to 4221.02 on May 31, 2023.
As more cash has come back to packaged products at national broker-dealers, $15 billion returned to the market. While mutual funds lost $10 billion in net sales, ETFs picked up $5 billion, and separately managed accounts (SMAs) picked up $10 billion (or 1.5% growth).