June 23, 2017

U.S. Fund-Flows Weekly Report: Funds Suffer Worst Weekly Net Outflows of the Year So Far

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) had negative flows of almost $20.8 billion for the fund-flows week ended Wednesday, June 21. This number represented the largest one-week net outflows of 2017, outdistancing the $19.0 billion for the fund-flows week ended January 18. Three of the four fund macro-groups saw net money leave their coffers, paced by the money market funds group (-$20.7 billion). Equity funds (-$2.2 billion) and municipal bond funds (-$891 million) also contributed to the total net outflows, while taxable bond funds took in $3.0 billion of net new money. It was the fourteenth straight week of positive net flows for the taxable bond funds group.

Market Overview

Slumping energy stocks and the Street’s concerns about low inflation hampered the performance of the Dow Jones Industrial Average and the S&P 500 Index in the latter half of the fund-flows week. Energy stocks were driven down by a decline in oil prices, hitting ten-month lows (U.S. crude and Brent oil closed the week at $42.40 and $44.66 per barrel, respectively) after increased supply from several key producers once again sparked fears of global oversupply. These fears persisted despite the measures taken by OPEC (as well as non-OPEC) oil producers to reduce global crude output. The yield on the U.S. 30-Year Treasury, which is driven by future inflation and growth forecasts, closed the week at 2.72%, its lowest close since last November. Despite this and the current low inflation rate (approximately 1.5%, per the Personal Consumption Expenditures Index), the Federal Reserve gave indications it still intends to move forward with its interest rate hike policy as planned.

ETFs

ETFs suffered net outflows of $2.1 billion for the week. Equity ETFs accounted for all of the negative flows (-$2.4 billion), while taxable bond ETFs and municipal bond ETFs contributed $318 million and $57 million of net inflows, respectively. iShares Core S&P 500 ETF (IVV) and SPDR S&P 500 (SPY) were responsible for the lion’s share of net outflows for individual equity ETFs; they saw $2.3 billion and $709 million leave, respectively. The largest individual net inflows among the taxable bond ETF group belonged to iShares Short Term Treasury Bond ETF (SHV, +$342 million) and iShares Core US Aggregate Bond (AGG, +$200 million). ETFs in the national municipal bond peer groups brought in the majority of net new money (+$44 million) for muni bond funds.

Conventional Equity Funds

Equity mutual funds had net inflows of $262 million, breaking a streak of 12 straight weekly net outflows. The long-term trend held true; nondomestic equity funds had net inflows of $1.47 billion, while domestic equity funds saw just over $1.2 billion net leave. For the year-to-date period domestic equity funds experienced net outflows of $26.3 billion, while nondomestic equity funds had positive net flows of $13.3 billion.

Conventional Fixed Income Funds

Taxable bond mutual funds took in $2.7 billion of net new money—for their third straight week of net inflows. Funds in the Core Plus Bond Funds (+$480 million), Multi-Sector Income Funds (+$314 million), and Core Bond Funds (+$214 million) peer groups contributed the most to the taxable bond fund group’s positive flows. On the municipal bond fund side of the ledger the largest net inflows belonged to the High Yield Muni Debt Funds peer group (+$226 million).

Article Keywords

Get In Touch

Subscribe