April 21, 2017

U.S. Fund-Flows Weekly Report: Funds Suffer Net Outflows of $8.6 Billion

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) experienced net outflows of $8.6 billion for the fund-flows week ended Wednesday, April 19. Money market funds were responsible for all the net outflows; they saw over $11.3 billion leave their coffers. The rest of the fund macro-groups all took in net new money, led by taxable bond funds with positive flows of $1.5 billion, while equity funds and municipal bond funds contributed $866 million and $290 million, respectively.

The broad equity market indices fell in trading for the fund-flows week; the Dow Jones Industrial Average and the S&P 500 Index lost 0.91% and 0.29%, respectively. It was the fifth straight weekly decrease for the Dow and the third for the S&P 500 as measured by the fund-flows week (Wednesday to Wednesday). This recent downturn reduced the Dow’s year-to-date gain to 3.25% and the S&P 500’s to 4.44%. The markets were hurt by some weaker-than-expected earnings, a decline in oil prices, and geopolitical crises dominating the news cycle. IBM, Goldman Sachs, Johnson & Johnson, and Wells Fargo all weighed down the markets with disappointing earnings announcements. Oil slumped in the second half of the week, hurting energy stocks as a U.S. government report forecasted that the shale oil output for May would have its largest monthly increase in over two years. Lastly, the uncertainty caused by mounting tensions around the globe (North Korea, China, Syria, and Russia) acted as a daily anchor with which the markets had to contend.

Equity ETFs (+$2.1 billion) were responsible for all of the net inflows for equity funds, while equity mutual funds saw almost $1.3 billion leave. The inflows for ETFs came mainly from nondomestic products (+$1.6 billion), but domestic equity ETFs contributed $585 million net to the total. The reverse was true for mutual funds; both domestic (-$1.2 billion) and nondomestic equity funds (-$93 million) had negative net flows.

The inflows for taxable bond funds were relatively evenly split: mutual funds took in $830 million of net new money, and ETFs grew their coffers by $677 million. Core Plus Bond Funds drove the mutual fund results with a net inflow of $939 million, while Corporate Debt Funds–BBB-Rated had the largest net inflows (+$323 million) for ETFs.

Municipal bond mutual funds had net inflows of $194 million for the week. High Yield Muni Debt Funds (+$216 million) had the largest net inflows, while Short Muni Debt Funds saw $178 million net leave.

Money market funds suffered net outflows of $11.3 billion for the week. Institutional U.S. Government Money Market Funds (-$4.2 billion) and Money Market Funds (-$1.9 billion) had the largest weekly net outflows.

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