March 10, 2017

U.S. Fund-Flows Weekly Report: U.S. Funds Extend Their Net-Inflows Streak to Seven Weeks

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) recorded net inflows of over $23.1 billion for the fund-flows week ended Wednesday, March 8. This was the seventh consecutive week of overall net inflows, during which U.S. funds grew their coffers by over $84 billion. Money market funds (+$11.8 billion) took in the most net new money this past week, while equity funds (+$8.5 billion) and taxable bond funds (+$2.8 billion) both contributed to the total net inflows. Municipal bond funds were the only fund macro-group suffering net outflows for the week (-$73 million).

After four straight weeks of gains both the Dow Jones Industrial Average and the S&P 500 Index lost ground during the week; the S&P 500 was off 1.38% and the Dow retreated 1.23%. Two key pieces of news worked together to dampen investor enthusiasm for the equity markets: economic data (jobless claims near a 44-year low) as well as interviews with Federal Reserve governors that pointed toward an interest rate increase at the Fed’s mid-month meeting. Energy stocks slumped during the last two trading days, driven by oil prices sinking to their lowest levels of the year on U.S. crude inventories hitting a record high.

Equity ETFs (+$10.4 billion) enjoyed their sixth straight week of net inflows and were responsible for all of the positive flows for the equity group; conversely equity mutual funds suffered their fourth straight week of net outflows (-$1.9 billion). The largest net inflows into individual ETFs belonged to iShares Core S&P 500 (IVV, +$2.1 billion) and SPDR S&P 500 (SPY, +$2.1 billion). For mutual funds domestic equity funds suffered net outflows of $2.6 billion, while nondomestic equity funds took in $706 million of net new money.

Mutual funds accounted for all the net inflows for the taxable bond funds group. Taxable bond mutual funds (+$3.4 billion) enjoyed their tenth straight week of positive net flows, while taxable bond ETFs saw $536 million leave for the week. Funds in the Core Plus Bond Funds classification (+$972 million) had the largest net inflows on the mutual fund side, followed by the Loan Participation Funds (+$803 million) category, continuing the post-election rally during which the classification attracted over $13.5 billion of net new money. For individual ETFs iShares iBoxx $ High Yield Corporate Bond (HYG, -$1.5 billion) and iShares iBoxx $ Investment Grade Corporate Bond (LQD, -$419 million) contributed the most to the group’s net outflows.

Municipal bond mutual funds (-$85 million) experienced their second straight week of net outflows. The largest contributors to these net outflows were the funds in the Short Muni Debt Funds (-$38 million) category.

Money market funds had positive flows of $11.8 billion for the week. The majority of these net inflows came from funds in the Institutional U.S. Government Money Market Funds (+$4.7 billion) and Institutional U.S. Treasury Money Market Funds (+$3.1 billion) classifications.

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