November 17, 2017

U.S. Fund-Flows Weekly Report: Funds Experience Positive Net Flows for the Second Consecutive Week

by Patrick Keon

After taking in almost $17.5 billion of net new money the prior week Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) had positive net inflows of $929 million for the fund-flows week ended Wednesday, November 15. The net-positive flows stemmed from money market funds (+$2.7 billion) and municipal bond funds (+$418 million), while taxable bond funds (-$1.9 billion) and equity funds (-$240 million) both saw net money leave their coffers.

Market Overview

The Dow Jones Industrial Average and the S&P 500 Index retreated 1.24% and 1.15%, respectively, for the fund-flows trading week. Negatively impacting the equity markets for the week were shares of energy stocks, which were weighed down by oil prices. Oil prices closed the week on a four-day losing streak; they were hurt by multiple developments: continuing growth in U.S. crude output (signaled by U.S. drillers adding the most new oil rigs in a week since second quarter 2017), a reduction in the forecast of global demand for oil, and the U.S. government’s reporting an unanticipated increase in crude oil and gas inventories. Also casting a shadow on the markets during the week was the uncertainty of whether the Donald Trump administration’s bill to provide tax cuts to corporations and individuals had the votes needed to pass.

ETFs

ETFs (+$2.7 billion) had net-positive flows for the seventh straight week. Equity ETFs (+$2.9 billion) were responsible for the lion’s share of the net inflows. For equity ETFs PowerShares QQQ (QQQ, +$1.2 billion) and First Trust Technology AlphaDex ETF (FXL, +$693 million) contributed the two largest net-positive flows. Taxable bond ETFs suffered net outflows of $280 million for the week, with the largest net redemptions belonging to SPDR Bloomberg Barclays High Yield Bond (JNK, -$947 million) and iShares iBoxx $ High Yield Corporate Bond ETF (HYG, -$649 million). Municipal bond ETFs recorded a small weekly net inflow of $23 million.

Equity Mutual Funds

Equity mutual funds (-$3.2 billion) suffered their twenty-first straight week of net outflows. The outflows were driven by domestic equity funds (-$3.7 billion), while nondomestic equity funds (+$548 million) took in net new money. The largest net outflows among domestic equity funds belonged to Lipper’s Large-Cap Growth Funds peer group (-$560 million), while the largest net inflows among nondomestic equity funds were attributable to the International Multi-Cap Core Funds (+$269 million) category.

Fixed Income Mutual Funds

Taxable bond mutual funds saw net money (-$1.6 billion) leave for the first week in nine. These outflows were driven mainly by the High Yield Funds peer group (-$2.6 billion). The negative flows were widespread, with five different high-yield products having net outflows of over $200 million each for the week. Conversely, municipal bond funds took in $395 million of net new money. The High Yield Muni Debt Funds (+$197 million) and General Muni Debt Funds (+$174 million) peer groups were responsible for the largest net inflows for the week.

Money Market Mutual Funds

Money market mutual funds had net-positive flows of approximately $2.7 billion for the week. The Institutional Money Market Funds (+$4.4 billion) and Institutional U.S. Government Money Market Funds (+$1.5 billion) peer groups were the largest contributors to the week’s net inflows.

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