Fund flows
What is Fund flows?
Fund flows denote the net volume of all cash inflows and outflows, indicating the amount of money entering and exiting the fund.
How are Fund flows tracked?
Fund flows are tracked through the ETF creation and redemption process. When the demand for an ETF's shares increases, new shares are created, leading to positive fund flows. Conversely, when shares are redeemed, this signifies a negative fund flows. This indicator can be monitored over different periods.
Why is Fund flows important?
Fund flows reflect investor sentiment and can serve as a signal for buying or selling ETF shares. This parameter demonstrates the liquidity and demand for the ETF, aiding investors and fund managers in assessing market dynamics. However, despite its usefulness, Fund flows do not always accurately predict market behaviour.