July 13, 2017

U.S. Fund-Flows Weekly Report: Funds Break a Four-Week Losing Streak

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) took in $3.1 billion of net new money for the fund-flows week ended Wednesday, July 12. It was the first week in five that funds overall experienced positive net flows; equity funds (+$3.5 billion) paced the net inflows, while taxable bond funds contributed $949 million to the total. On the negative side of the ledger money market funds and municipal bond funds saw $1.2 billion and $173 million leave their coffers, respectively.

Market Overview

The S&P 500 Index (+0.44%) and the Dow Jones Industrial Average (+0.25%) both recorded gains for the fund-flows week. Both indices moved into the black for the week on the final trading day as the S&P 500 (+0.73%) and the Dow (+0.57%) both recorded significant one-day gains. The markets rose that day on Federal Reserve Chair Janet Yellen’s taking a more dovish stance on interest rate hikes. In testimony before Congress Yellen gave an upbeat message on the state of the U.S. economy but emphasized that the Fed has taken notice of the recent weakness in inflation data and indicated that might lead to the Fed’s reducing the speed it had planned to raise rates. The Street sent stock prices higher (the Dow closed at a record high for the first time in a month) and bond yields lower (the yield on the ten-year Treasury fell 0.43%) on this news.

ETFs

ETFs took in $6.7 billion of net new money, breaking a three-week streak of net outflows. Equity (+$5.5 billion) and taxable bond (+$1.2 billion) ETFs accounted for all the net inflows, while municipal bond ETFs saw $10 million leave. The largest net inflows among individual equity ETFs belonged to PowerShares QQQ (QQQ, +$4.4 billion) and iShares Core MSCI EAFE (IEFA, +$1.9 billion). The largest individual contributors to the net inflows for taxable bond ETFs were iShares 20+ Treasury Bond (TLT, +$581  million) and iShares Core U.S. Aggregate Bond (IEFA, +$533 million).

Equity Mutual Funds

Equity mutual funds suffered net outflows (-$2.0 billion) for a third straight week. The outflows were once again driven by domestic equity funds (-$4.6 billion), while nondomestic equity funds took in $2.6 billion of net new money.

Fixed Income Mutual Funds

Taxable bond mutual funds also had their third straight weekly net outflows, but to the tune of only $231 million. Lipper’s High Yield Funds peer group (-$1.4 billion) had the most significant net outflows for the week, while net inflows to Core Plus Bond Funds (+$745 million) and Multi-Sector Income Funds (+$408 million) helped to reduce the overall net outflows.  Municipal bond funds had net outflows of $163 million paced by an outflow of $189 million from the Intermediate Muni Debt Funds peer group.

Money Market Mutual Funds

Money market funds experienced net outflows of $1.2 billion for the week. The peer groups with the largest changes for the week were Institutional U.S. Treasury Money Market Funds (-$3.7 billion) and Institutional Money Market Funds (+$2.5 billion).

 

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