June 29, 2017

U.S. Fund-Flows Weekly Report: Funds Experience Net Outflows for the Third Straight Week

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) had negative flows of almost $9.4 billion for the fund-flows week ended Wednesday, June 28. The net outflows were driven by equity funds (-$9.7 billion) and taxable bond funds (-$5.5 billion). Money market funds (+$5.3 billion) and municipal bond funds (+$496 million) both took in net new money, reducing the amount of the overall net outflows for the fund macro-groups. This marked the third consecutive week the fund macro-groups experienced aggregate negative flows.

Market Overview

The Dow Jones Industrial Average (+0.21%) and the S&P 500 Index (+0.21%) both recorded gains for the fund-flows week. The S&P 500 (+0.88%) and the Dow (+0.68%), driven by rallies in the financial and technology sectors, both posted significant increases on the last trading day, pushing their respective returns for the week into the black. Both indices had slumped the day before (S&P 500 -0.81%, the Dow -0.46%) after the U.S. Senate announced it was delaying its vote on the proposed new healthcare bill. The vote delay once again stirred investor fears that Donald Trump’s administration will not be able to push through its economic agenda (tax cuts and deregulation). The markets had appreciated since Trump’s election, largely on the belief that this proposed agenda would spur economic growth.

ETFs

ETFs suffered net outflows for the second consecutive week. Over $800 million left their coffers after $2.1 billion left the prior week. The net outflows were driven by equity ETFs (-$2.1 billion); taxable bond ETFs (+$1.2 billion) and municipal bond products (+$84 million) both took in net new money. The largest net outflows by far among individual equity ETFs belonged to SPDR S&P 500 (SPY, -$2.4 billion). The largest net inflows for individual taxable bond products belonged to iShares US Treasury Bond (GOVT, +$274 million), iShares JPMorgan USD Emerging Market Bond (EMB, +$252 million), and iShares 20+ Year Treasury Bond (TLT, +$228 million).

Equity Mutual Funds

After net inflows the prior week (for the first time in three months) equity mutual funds returned to their losing ways with $7.6 billion net leaving their coffers this past week. As usual, the negative flows were dominated by domestic equity funds (-$7.3 billion), but nondomestic equity funds also suffered net outflows (-$238 million). Among the domestic equity products, funds in Lipper’s Multi-Cap Growth Funds peer group had the largest net outflows for the week at $4.1 billion.

Fixed Income Mutual Funds

Taxable bond mutual funds had their worst weekly net outflows for the year to date as $6.7 billion left their coffers.  The hardest hit peer groups were Flexible Income Funds (-$1.5 billion) and High Yield Funds (-$1.2 billion). Municipal bond funds took in $413 million of net new money, paced by High Yield Municipal Debt Funds (+$215 million).

Money Market Mutual Funds

Money market funds had net inflows of $5.3 billon, after experiencing combined net outflows of over $36 billion for the previous two weeks. The major contributors to this past week’s positive flows were Institutional U.S. Treasury Money Market Funds (+$4.7 billion) and Institutional U.S. Government Money Market Funds (+$2.0 billion).

 

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