Outflows From Equities Accelerate At The End Of Q3

In the asset management business, fixed income has done much better than equities, for the year so far (in terms of flows). According to the latest statistics released by Wells Fargo & Company (NYSE:WFC), the fixed income funds just had their 17th consecutive week (ending September 26) of positive cash inflow. So far this year, $240 billion has flowed into bonds, which beats out the total of $120 billion for the entire year of 2011. $8.3 billion were added in the week ending on Sep 26, which is more than $8.0 billion for the previous week, and the 3 month average of $6.8 billion/week.

Outflows From Equities Accelerate At The End Of Q3

On the other hand equity funds are losing on cash. The outflows for the corresponding week amounted to $7.5B, which is far more than the average of $3.8/week billion for the last three months. The total year to date outflow from equities is now equal to $84.8 billion which is comparable to last year’s total of $129.6 billion. WFC’s research cites the upward trends in S&P 500 index and MSCI World index which are up 6 percent in Q3. This could have led to sell offs to gain profits, which could account for the sudden rise in outflows to $7.5 billion from $5.2 billion in the second last week of Q3.

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In case of Hybrid funds, the trend was consistent until the last full week of Q3, when the hybrid funds experienced their first outflow of $0.4 billion. For the rest of Q3, there have been no outflows. The inflows have also been weak, with an average of $1.1 billion/week for the last 3 months. The total inflow for the three quarters of 2012 has amounted to $42 billion.

Wells Fargo & Company (NYSE:WFC) rates asset managers T. Rowe Price Group, Inc. (NASDAQ:TROW) and Franklin Resources, Inc. (NYSE:BEN) at Outperform, and expects them to improve further, with the appreciation in the market indexes. Franklin Resources, Inc. (NYSE:BEN)’s fixed income platform takes up 45 percent of total assets, while T. Rowe Price Group, Inc. (NASDAQ:TROW) has 75 percent of its portfolio invested in equities.