July 27, 2017

U.S. Fund-Flows Weekly Report: Funds Take In $20 Billion of Net New Money

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) experienced positive flows of $20.0 billion for the fund-flows week ended Wednesday, July 26. Money market funds (+$18.6 billion) were responsible for the lion’s share of the net inflows, while taxable bond funds (+$2.5 billion) and municipal bond funds (+$323 million) also contributed to the total positive net flows. Equity funds (-$1.4 billion) were the only fund macro-group suffering net outflows for the week.

Market Overview

The Dow Jones Industrial Average (+0.32%) and the S&P 500 Index (+0.16%) both recorded gains for the third straight fund-flows week of trading. Once again the markets were driven by good news from the Federal Reserve and strong corporate earnings. Companies reporting earnings that benefitted the broad equity indices included McDonald’s, Caterpillar, AT&T, and Boeing. Boeing’s stock posted its best one-day increase since 2008, closing at its all-time high of $239.91, up $6.46 or 2.77%. This performance was responsible for a 144-point increase in the Dow that day, without which the index would have been in the red for both the day and the trading week. The Fed did not raise interest rates at its meeting during the week and once again indicated it would be paying extra attention to inflation data and would take precautions in unwinding the $4.5-trillion quantitative-easing balance sheet so as to not unduly impact the economy.

ETFs

ETFs had positive net flows (+$3.9 billion) for the third consecutive week. Equity ETFs (+$4.9 billion) were responsible for the majority of the net inflows, while taxable bond ETFs (+$675 million) and municipal bond ETFs (+$124 million) also contributed to the positive flows. The largest individual net inflows among equity ETFs belonged to SPDR S&P 500 (SPY, +$5.8 billion) and iShares Core S&P 500 ETF (IJH, +$1.0 billion). For the fixed income macro-group the Corporate Debt Funds BBB-Rated ETFs (+$543 million), Core Bond Funds ETF (+$273 million), and General & Insured Muni Debt ETFs (+$94 million) peer groups had the largest net inflows.

Equity Mutual Funds

Equity mutual funds saw money leave their coffers (-$6.3 billion) for the fifth consecutive week. Domestic equity funds (-$6.1 billion) were once again the driver of the outflows, while nondomestic equity funds contributed $257 million to the total negative flows.


Fixed Income Mutual Funds

Taxable bond mutual funds had net inflows of $1.8 billion for the week. It was the group’s second straight week of net inflows, driven by investors pouring money into the Core Plus Bond Funds (+$1.0 billion) peer group. Municipal bond funds also took in net new money (+$199 million) for the second consecutive week. This group’s net positive flows were paced by the High Yield Muni Debt Funds (+$182 million) peer group.

Money Market Mutual Funds

Money market funds took in over $18.6 billion of net new money this past week. The Institutional U.S. Government Money Market Funds (+$15.4 billion) and Institutional U.S. Treasury Money Market Funds (+$4.0 billion) peer groups were responsible for the overwhelming majority of the macro-group’s net inflows.

 

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