What are Funds Flow Statements?

Answer Posted / sasi kumar

The net of all cash inflows and outflows in and out of
various financial assets. Fund flow is usually measured on
a monthly or quarterly basis. The performance of an asset
or fund is not taken into account, only share redemptions
(outflows) and share purchases (inflows).

Net inflows create excess cash for managers to invest,
which theoretically creates demand for securities such as
stocks and bonds.

Investors and market analysts watch fund flows to gauge
investor sentiment within specific asset classes, sectors,
or for the market as a whole. For instance, if net fund
flows for bonds funds during a given month is negative by a
large amount, this would signal broad-based pessimism over
the fixed-income markets.

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