by Pam Martens and Russ Martens
Wall Street on Parade
Refinitiv Lipper, which has been tracking mutual fund flows for the past 18 years, reports that for the week ended Wednesday, October 14, equity (stock) mutual funds marked their 25th week of net negative outflows, losing -$8.6 billion for the week. Year-to-date, that brings their net outflows to -$388.7 billion. Refinitiv Lipper notes that if that figure stands, it will be the “largest annual net outflows ever, significantly outdistancing last year’s net negative result (-$294.0 billion).”
That’s a pretty historic achievement given that the U.S. had the worst stock market freak out since the Great Depression in 2008 and early 2009. The S&P 500 Index lost 56.8 percent from October 9, 2007 to March 9, 2009.
What raises further alarm bells about the steady outflow from stock mutual funds this year is that for the past 9-1/2 months there has been new money flowing into 401(k) plans from employees who have the money automatically deducted from their paychecks and sent along to their 401(k)s. Since stock-based Exchange Traded Funds (ETFs) have barely cracked the 401(k) market, it’s the stock mutual funds in 401(k)s that should have been the big beneficiaries of this money – and yet they are still seeing historic net outflows of money.