Are Equity ETFs Gaining Popularity over Equity Mutual Funds?

On Wednesday, September 19th, a week following the Fed's most recent QE announcement, equity mutual funds experienced week-over-week net inflows of -$1.9B, whereas equity ETFs saw net inflows of $13.3B over that same time frame, $5.48B flowing into SPY alone.  Furthermore, this was the sixth week in a row that equity mutual funds experienced negative net inflows.  (Source: Thomson Alpha Now blog)
Yet, while these numbers may seem drastic, they appear to be part of a new trend that's been present and developing over the past 3 years.  While equity mutual fund assets drastically outsize equity ETF assets (seen in the first chart below), you can see that equity ETF assets appear to be growing at a faster annualized rate than equity mutual fund assets over the past few years (seen in the bottom chart below).  This trend seems especially true following the market correction in 2011.
Overall, this trend is beginning to imply that investors and/or traders are likely moving more toward ETFs as they value trading liquidity more highly than in the past.
Justin Wood
If you are a subscriber to, click here to read our recent reports.  If you would like to learn more about the research and commentary offered by Hays Advisory, click here.
Please see important disclosures at the bottom of this page.