by Patrick Keon.
Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) took in net-new money for the fifth straight week, with positive net inflows of $4.8 billion for the fund-flows week ended Wednesday, December 6. Equity funds (+$3.0 billion) and money market funds (+$2.0 billion) were responsible for the bulk of the net inflows, while taxable bond funds contributed $547 million to the total. Municipal bond funds suffered net outflows (-$807 million), breaking a streak of four consecutive weekly increases.
The Dow Jones Industrial Average and the S&P 500 Index experienced gains of 0.84% and 0.12%, respectively, for the fund-flows trading week. The week’s increases brought the Dow’s year-to-date return to 22.15% and the S&P’s to 17.44%. Both indices captured the lion’s share of their weekly gains on the first trading day, Thursday, November 30. The Dow and the S&P 500 both closed at record highs that day, with the Dow finishing above 24000 for the first time. The Dow had closed 2016 at 19762.60, which made 24000 the fifth 1,000-point barrier the index crossed this year. The main driver of the markets on November 30 was optimism that the Republican-sponsored tax bill would pass in the U.S. Senate. The tax bill gained momentum from Senator John McCain’s throwing his support behind the bill; he stated that he believed it would give tax relief to all Americans and boost the economy. The Senate did eventually pass the tax bill in the early-morning hours of Saturday, December 2.
ETFs (+$14.4 billion) had net-positive flows for the tenth straight week. Equity ETFs (+$14.6 billion) were responsible for the lion’s share of the net inflows. Five equity ETFS took in over $1.0 billion each of net new money for the week, led by SPDR S&P 500 (SPY, +$6.3 billion), iShares Russell 2000 ETF (IWM, +$2.2 billion), and SPDR Dow Jones Industrial Average (DIA, +$1.7 billion). Municipal bond ETFs recorded a slight net inflow of $128 million. Taxable bond ETFs experienced net outflows of $271 million for the week, with the largest net outflows belonging to iShares iBoxx $Investment Grade Corporate Bond ETF (LQD, -$894 million).
Equity Mutual Funds
Equity mutual funds (-$11.6 billion) suffered their twenty-fourth straight week of net outflows. Both domestic equity funds (-$10.3 billion) and nondomestic equity funds (-$1.3 billion) saw their coffers shrink. The largest net outflows among domestic equity funds and nondomestic equity funds belonged to Lipper’s Large-Cap Core Funds (-$1.9 billion) and Global Large-Cap Growth Funds (-$596 million) peer groups.
Fixed Income Mutual Funds
Taxable bond mutual funds had net-positive flows of $819 million, while, conversely, municipal bond mutual funds suffered net outflows of $935 million for the week. Core Bond Funds (+$1.3 billion) and Core Plus Bond Funds (+$708 million) paced the net inflows among taxable bond funds, while Intermediate Muni Debt Funds (-$280 million), High Yield Muni Debt Funds (-$227 million), and Short/Intermediate Muni Debt Funds (-$226 million) all suffered significant net outflows.
Money Market Mutual Funds
Money market mutual funds had net-positive flows (+$2.0 billion) for the fifth straight week. The largest net inflows for the week belonged to the Institutional U.S. Treasury Money Market Funds (+$5.7 billion) and Institutional U.S. Government Money Market Funds (+$4.3 billion) peer groups.