What is net flow fund?

Net fund flow is a measure of the net movement of cash into and out of investment vehicles like mutual funds and exchange-traded funds (ETFs). It indicates the inflow of cash into the fund (inflows) and the outflow of cash out of the fund (outflows), and is calculated as the difference between these two values. A net inflow occurs when more cash flows into the mutual fund than out of it, creating excess cash for managers to invest, while a net outflow indicates that more cash was taken from the mutual fund than was invested in it.

Net fund flow is distinct from the performance of individual assets, focusing solely on the movement of cash. It reflects investor sentiment and can provide insights into market trends and investor behavior. Negative net fund flows can signal potential market downturns or investor pessimism about specific asset classes or sectors. Conversely, positive net fund flows can indicate investor confidence and capital inflows.