October 6, 2017

U.S. Fund-Flows Weekly Report: Funds Experience Overall Net Outflows

by Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) experienced net-negative flows of $1.0 billion for the fund-flows week ended Wednesday, October 4. The overall weekly net outflows were attributable mostly to money market funds (-$3.9 billion), but equity funds (-$1.0 billion) and municipal bond funds (-$140 million) also contributed to the outflows. Taxable bond funds (+$4.0 billion) were the only fund macro-group taking in net new money for the week, marking their thirteenth consecutive week of net-positive flows.

Market Overview

The Dow Jones Industrial Average (+1.44%) and the S&P 500 Index (+1.22%) both posted solid returns for the fund-flows trading week. The week’s gains pushed the year-to-date return for the Dow and the S&P 500 to 14.67% and 13.35%, respectively. Both indices recorded increases every day during the week, with the largest increase for each coming on the first trading day of Q4 2017; the Dow and S&P 500 were up 0.68% and 0.39%, respectively, on October 2. The week’s rises seemed to stem from the news that the Trump administration is preparing to take a swing at overhauling the tax code.

ETFs

ETFs took in $7.1 billion of net new money during the week. The net-positive flows were driven by equity ETFs (+$5.3 billion), while taxable bond ETFs (+$1.7 billion) and municipal bond funds (+$72 million) also contributed to the total. For equity ETFs iShares Core S&P 500 (IVV, +$1.0 billion) and Industrial Select Sector SPDR (XLI, +$969 million) contributed the two largest net-positive flows. The largest net inflows among the taxable bond ETF group belonged to iShares iBoxx Investment Grade Corporate (LQD, +$492 million) and iShares iBoxx High Yield Corporate (HYG, +$399 million).

Equity Mutual Funds

Equity mutual funds experienced their fifteenth straight weekly net outflows, with $6.4 billion leaving their coffers. Both domestic equity funds (-$5.4 billion) and nondomestic equity funds (-$1.0 billion) contributed to the net outflows. The largest net outflows among domestic equity funds belonged to Lipper’s Large-Cap Growth Funds peer group (-$1.2 billion), while the largest net outflows among nondomestic equity funds were attributable to the International Large-Cap Growth Funds (-$3.0 billion) category.

Fixed Income Mutual Funds

Taxable bond mutual funds (+$2.3 billion) took in net new money, while municipal bond mutual funds suffered net outflows of $212 million. The largest net inflows in the taxable bond fund macro-group belonged to Core Plus Bond Funds (+$748 million) and Core Bond Funds (+$548 million). The largest net outflows for municipal bond funds belonged to the General Muni Debt Funds (-$63 million) peer group.

Money Market Mutual Funds

Money market mutual funds suffered net outflows of approximately $3.9 billion for the week. The Institutional U.S. Government Money Market Funds (-$3.8 billion) and Institutional Money Market Funds (-$1.0 billion) peer groups were the largest contributors to the week’s net outflows.

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