Fund Flow

Fund flow statements seek to answer the age-old question that's been plaguing many of us for years: Where did it come from, and where did it go? By “it,” we mean money...and we think it’s going to take more than asking Cotton Eye Joe to get us the information we need.

The term “fund flow” might sound like some sort of financial yoga, but really, it’s pretty simple. Fund flow refers to how much money comes in…and how much money goes out. At the household level, our funds flowing in would include our salary, any interest we receive on accounts we have, and the extra cash we get for our side job cutting puppy toenails. Our funds flowing out include our bills, any tax payments, and any other random expenses or purchases. On the organizational level, fund flow works the same way, but usually with a lot more transactions to consider.

When we look at fund flow, we’re not making any value judgments about how the money is spent or earned. We don’t care about whether our company’s stock is over-or-underperforming, for example, and if a quarter of our household income this month went to prepping for Comic-Con, well…everyone has their thing. All we care about with fund flow evaluation is figuring out whether we’re netting money or losing money. Like we said before, how much is coming in...and how much is going out. We can look at fund flow by the week, month, quarter, year, whatevs.

Investors and analysts look at fund flow statements to gauge how particular market sectors or types of assets are doing overall. Typically (and of course there are exceptions), a big negative fund flow indicates a lack of investor confidence, while a big positive fund flow indicates the opposite. They can then make predictions and investments based on the trends they see.