\ncategories (net outflows totalled $330bn for households, pension funds and mutual funds) and for non-resident investors (net outflows of $173m for rest
\nof the world). Exchange traded funds were the exception (net inflows totalling $100bn over this period).
\n
![\"cumulative_flow_of_funds_into_out_of_equities_by_non-residents.jpg\"](\"http:\/\/www.next-finance.net\/http:\/\/beta.next-finance.net\/wp-content\/uploads\/2016\/09\/cumulative_flow_of_funds_into_out_of_equities_by_non-residents.jpg\")
<\/a>\nThe other data that is available reveals that:<\/p>\n
- \n
- these trends were confirmed over the course of 2016, but that equity purchases by non-resident investors did not decline by as much (Brexit
\neffect) as indicated by the table below; and<\/li>\n - part of the outflows (by non-resident and domestic investors) is in fact being channelled into ETF, a phenomenon also in evidence in the
\ncredit market.<\/li>\n<\/ul>\n![\"part_of_the_outflows.jpg\"](\"IMG\/jpg\/part_of_the_outflows.jpg\")
<\/a><\/p>\nHowever, the Flow of Funds remains globally on a downtrend (dotted line in the right-hand chart above), while when it comes to the ownership
\nstructure for US equities, ETF still occupy a marginal place (5% in 2016).<\/p>\n![\"cumulative_flow_into_out_of_us_equities_m_.jpg\"](\"IMG\/jpg\/cumulative_flow_into_out_of_us_equities_m_.jpg\")
<\/a><\/p>\nHow can one reconcile the net outflows of funds with the rise of US equity indices? The explanation seems to lie on the supply side: the biggest buyers
\nof US equities have in fact turned out to be the companies themselves… Quarterly Flow of Funds data reveals that net issuance of US equities was
\nnegative to the tune of $400bn between 30 June 2015 and 31 March 2016.<\/p>\nIn the US, share buybacks are the main conduit for distributing income to shareholders, mainly for reasons to do with the tax system. Since the start
\nof 2015, what will be observed is that the build up in cash and cash equivalents held by companies has accelerated, while interest rates have held on
\nlow (facilitating the financing of share buybacks).<\/p>\nThe right-hand chart below shows that this trend was still in evidence in the last few quarters, which should be confirmed by the Flow of Funds (due to
\nbe published on 16 September). In Europe, by contrast, no such phenomenon has been observed (dividends are favoured for rewarding shareholders
\nin this geography).<\/p>\n