The Securities and Exchange Commission (SEC) recently published its Registered Fund Statistics Report for the period ending September 2023. This report provides valuable insights into the trends and performance of various registered investment funds, including mutual funds, exchange-traded funds (ETFs), and closed-end funds. Based on data collected via Form N-PORT, the report captures important developments in fund assets, flows, and portfolio compositions. Here are the key findings from this report:
1. Growth in the Number of Funds
As of September 2023, there were approximately 12,647 registered funds, an increase from previous months. The growth was primarily driven by ETFs, particularly in the U.S. equity and bond sectors. The number of ETFs grew to 3,088, marking steady growth throughout 2023, while mutual funds showed slight declines in certain categories such as multi-asset and municipal bond funds.
2. Total Fund Assets and Net Assets
The total assets under management (AUM) of all registered funds reached $26.15 trillion as of September 2023, down from the year’s peak of $27.77 trillion in July. Mutual funds account for the largest share of assets, with about $18.53 trillion in total assets. ETFs also showed strong growth, with assets reaching $7.19 trillion by the end of the period.
The report highlights fluctuations in asset classes, with U.S. equity funds experiencing volatility but remaining dominant. U.S. equity ETFs saw their assets rise to $4.47 trillion, showing resilience amidst market challenges.
3. Fund Flows
Fund flows reflect investor sentiment throughout the period. The report shows that total net flows were negative, with mutual funds recording significant outflows, especially in U.S. equity and multi-asset funds. For example, mutual funds saw a net outflow of $59 billion in September 2023, driven by declining interest in U.S. equity and multi-asset funds.
Conversely, ETFs, particularly those focused on taxable bonds and U.S. equities, experienced positive net flows. Taxable bond ETFs had net inflows of $10 billion, indicating sustained investor interest in fixed income products.
4. Fund Portfolio Investments
The report provides detailed information on the composition of fund portfolios. As of September 2023, the aggregate gross value of investments across all funds reached $29.89 trillion. Common equity remains the dominant investment category, with over $19 trillion in holdings. U.S. Treasury debt, corporate debt, and mortgage-backed securities also make up significant portions of fund portfolios.
5. Liquidity and Risk Management
The report highlights the liquidity classifications of fund portfolios. A significant percentage of assets were classified as “highly liquid,” providing assurance that funds can meet redemptions without significant price impacts. This liquidity management is critical for maintaining stability in times of market stress.
6. Derivatives and Securities Lending
The use of derivatives remains a common strategy for risk management and performance enhancement. Interest rate and foreign exchange derivatives were among the most frequently used, reflecting efforts to hedge against currency and rate volatility. Additionally, securities lending continues to be a source of revenue for many funds, especially ETFs.
Conclusion
The SEC’s Registered Fund Statistics report provides a comprehensive view of the trends in the investment fund industry as of September 2023. With growing interest in ETFs and shifts in asset flows, the report underscores the importance of understanding market dynamics, particularly in equity and bond markets. As the financial landscape continues to evolve, these insights will help regulators and investors navigate changing conditions in the fund industry.
About Michael Rasmussen
Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.
Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include:
- Investment Adviser Compliance Essential for Chief Compliance Officers
- Foundations of Investment Adviser Compliance
- What is a “Security”?
- Investment Adviser Marketing Rule
- Regulation A – Exemption from Registration
- Regulation Crowdfunding – Exemption from Registration
- Regulation D – Exemption from Registration
Michael can also be found on LinkedIn.
Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.