December 9, 2016

U.S. Fund-Flows Weekly Report: U.S. Funds Take in Net New Money for the Fourth Consecutive Week

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) took in $11.6 billion of net new money for the fund-flows week ended Wednesday, December 7. This marked the fourth straight week of net inflows for U.S. funds, during which time they grew their coffers by $43.6 billion. The positive flows for the past week were driven by money market funds (+$14.7 billion) and taxable bond funds (+$1.1 billion), while municipal bonds funds (-$2.2 billion) and equity funds (-$2.0 billion) both suffered net outflows.

The post-election rally continued for the equity markets; the Dow Jones Industrial Average and the S&P 500 Index grew 2.2% and 1.9%, respectively, for the fund-flows week. Since the election the Dow is up 6.6%, while the S&P has gained 4.8%, pushing their year-to-date gains to 12.2% and 9.7%, respectively. This rally is tied to Trump’s business-friendly campaign promises of lower corporate taxes, less regulation, and a bump in infrastructure spending.

Equity ETFs (+$7.9 billion) pushed their consecutive net-inflows streak to nine weeks, including over $40 billion of positive flows since the election. The big winners this past week were ETFs in Lipper’s S&P 500 Index Funds (+$5.4 billion), Natural Resources Funds (+$1.3 billion), and Financial Services Funds (+$900 million) classifications. Equity mutual funds did not experience the same good fortune; they suffered their thirty-ninth straight week of net outflows (-$9.9 billion). Once again, domestic equity mutual funds (-$8.9 billion) fared significantly worse than nondomestic equity funds (-$1.0 billion).

After five straight weeks of net outflows taxable bond funds posted a positive number this past week (+$1.1 billion). All of these inflows could be attributed to mutual funds (+$1.5 billion), while taxable bond ETFs saw $412 million leave. On the mutual fund side several fund categories posted significant net inflows for the week: High Yield Funds (+$1.5 billion), Loan Participation Funds (+$1.2 billion), and Core Plus Bond Funds (+$835 million). For ETFs the largest net outflows belonged to Corporate Debt Funds BBB-Rated (-$762 million) and General U.S. Treasury Funds (-$399 million).

As investors continued to pull money from safe–haven assets, municipal bond mutual funds (-$2.1 billion) experienced their fourth consecutive weekly net outflows over $2 billion. Funds in the Intermediate Muni Debt Funds (-$578 million) and High Yield Muni Debt Funds (-$469 million) classifications were the hardest hit during the week.

Money market funds (+$14.7 billion) took in net new money for the fourth consecutive week. The largest contributors to the weekly total were U.S. Government Money Market Funds (+$5.0 billion) and Institutional U.S. Treasury Money Market Funds (+$4.8 billion).


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