Thursday, December 23, 2010

Fund Flow

Fund flows are flows of funds into and out of mutual funds (those that are accepting applications and allowing withdrawals). Inflows are funds being invested into a mutual fund, either through lump sum investments or ongoing contributions. Outflows are funds being withdrawn by investors, which can be for a variety of reasons such as retirement, performance dissatisfaction, performance chasing, etc. Net flows are the net flows in or out of a fund. Fund flows are monitored both at an individual fund level and aggregate level for differing reasons and by various persons. For example individual fund level flows are important for the portfolio manager as it impacts on whether they may need to buy more investments, or sell some to raise liquidity. It is also important to the businesses that provide managed funds as it impacts on the level of funds under management, and therefore profitability via asset based fees. At an industry level fund flows are watched by investors and market economists as significant flows into and out of funds, and certain types of funds can provide interesting signals and insights into investor behavior.

Synonyms:  Inflows, Outflows, Deposits, Withdrawals, Netflows, Fund cash flows

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