Mutual Fund Flows

We've been seeing steady outflows from equity funds and a steady inflow into bond funds since May.  We are also overbought.   It is similar to the fall 2009 period where the market grinded higher despite the equity fund outflows. A top was made only after a few straight months of inflows (January-April 2010).

The best way to interpret this is that you don't get a strong rally off non-oversold conditions unless you get equity fund inflows. The strongest upmoves off non-oversold conditions occurred when the equity inflows were strongest (April-August 2009, February-April 2010). If we don't get equity fund inflows, we won't have the fuel to go much higher.


Investment Company Institute data


Monthly Net New Cash Flow (billions)

3/31/2009 -25,571

4/30/2009 11,910

5/31/2009 18,286

6/30/2009 12,169

7/31/2009 9,422

8/31/2009 4,045

9/30/2009 -10,156

10/31/2009 -6,932

11/30/2009 -2,634

12/31/2009 -3,549

1/31/2010 14,432

2/28/2010 256

3/31/2010 11,236

4/30/2010 13,163

5/31/2010 -24,701

6/30/2010 -5,637

7/31/2010 -10,430

Estimated Weekly Net New Cash Flow (billions)

8/4/2010 -2,201

8/11/2010 -1,431

8/18/2010 -2,822

8/25/2010 -4,603

9/1/2010 -9,541

9/8/2010 -1,061