by Patrick Keon.
Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) had net inflows of $22.7 billion for the fund-flows week ended Wednesday, August 23. This marked the fifth straight week of overall positive flows during which time funds saw their coffers grow almost $94 billion. Money market funds were responsible for the lion’s share of the net inflows this past week (+$24.6 billion) as well as for the five-week period (+$97.2 billion). Taxable bond funds (+$643 million) and municipal bond funds (+$751 million) both took in net new money while equity funds experienced net outflows of $3.3 billion.
The Dow Jones Industrial Average (-0.97%) and the S&P 500 Index (-0.98%) were both down approximately 1.0% for the fund-flows trading week. Both indices suffered the bulk of their losses at the start of the trading week as the equity markets were weighed down by concerns about terrorism and the current administration’s agenda. Donald Trump’s administration continued to take body blows, hurt by another high-ranking member leaving (Steve Bannon, Chief Strategist), the rumor that another one was on the way out the door (Gary Cohn, Chief Economic Advisor), and continued doubt on the street that the administration would ever be able to get its economic agenda (tax reform, infrastructure spending) off the ground. A terrorist attack in Barcelona created additional uncertainty for the markets, and both indices retreated over 1.5% during the week’s first two trading days. The markets recouped some of those losses near the end of the week as they took strength from the news that the administration was making progress in finalizing its tax reform plan.
ETFs had net inflows (+$278 million) for the seventh consecutive week. Taxable bond ETFs (+$1.5 billion) and municipal bond ETFs (+$127 million) both took in net new money, while equity ETFs (-$1.4 billion) saw net money leave. For taxable bond ETFs the Core Bond ETFs (+$509 million), General U.S. Treasury ETFs (+$387 million), and Corporate Debt BBB-Rated ETFs (+$242 million) classifications contributed the most to the net inflows. Domestic equity ETFs (-$1.5 billion) accounted for all the net outflows for equity ETFs.
Equity Mutual Funds
Equity mutual funds suffered net outflows (-$2.0 billion) for the ninth consecutive week. Domestic equity funds (-$2.9 billion) were responsible for all the net-negative flows, while nondomestic equity funds had net inflows just north of $900 million.
Fixed Income Mutual Funds
Taxable bond mutual funds suffered negative net flows of $881 million for the week. The net outflows were driven by the Global Income Funds (-$1.0 billion), High Yield Funds (-$925 million), and U.S. Mortgage Funds (-$392 million) peer groups. The net inflows for municipal bond funds (+$624 million) were driven by funds in the High Yield Muni Debt Funds (+$249 million) peer group.
Money Market Mutual Funds
Money market mutual funds took in $21.2 billion of net new money for the week and over $97 billion during the last five weeks. The Institutional U.S. Government Money Market Funds (+$20.3 billion) peer group contributed the most to this past week’s net inflows.