December 22, 2017

U.S. Fund-Flows Weekly Report: Funds Suffer Worst Weekly Net Outflows of the Year

by Patrick Keon.

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and ETFs) suffered their worst weekly net outflows of 2017 as their coffers shrank $46.4 billion for the fund-flows week ended Wednesday, December 20. Equity funds (-$22.2 billion) and money market funds (-$21.2 billion) dominated the net outflows, while taxable bond funds contributed $3.3 billion to the total outflows. Municipal bond funds, with a net inflow of $251 million, were the only group taking in net new money for the week.

Market Overview

The S&P 500 Index and the Dow Jones Industrial Average appreciated 0.62% and 0.57%, respectively, for the fund-flows trading week. The markets took strength from optimism that the Republican tax bill would be passed soon. Specifically, the markets were looking to the proposed reduction in U.S. corporate tax rates (from 35% to 21%) to be an additional spark to the U.S. economy—which is already heating up. The week’s gains brought the Dow’s year-to-date return to 25.12% and the S&P’s to 19.67%.

ETFs

ETFs (-$10.1 billion) suffered net outflows for the first time in 12 weeks. Equity ETFs (-$10.0 billion) were responsible for the bulk of these net outflows. The largest net outflows for individual equity ETFs belonged to iShares Core S&P 500 ETF (IVV, -$2.1 billion) and PowerShares QQQ Trust (QQQ, -$2.0 billion). Taxable bond ETFs also saw net money leave (-$307 million), while municipal bond ETFs took in $212 million of net new money.

Equity Mutual Funds

For the twenty-sixth straight week equity mutual funds (-$12.2 billion) suffered net outflows. Both domestic equity funds (-$8.1 billion) and nondomestic equity funds (-$4.1 billion) saw money leave their coffers. The largest net outflows among domestic equity funds and nondomestic equity funds belonged to Lipper’s Multi-Cap Value Funds (-$1.6 billion) and Global Large-Cap Core Funds (-$1.6 billion) peer groups.

Fixed Income Mutual Funds

Taxable bond mutual funds had net-negative flows of $2.9 billion, while, conversely, municipal bond mutual funds took in $38 million of net new money for the week. Corporate Debt BBB-Rated Funds (-$360 million) and U.S. Mortgage Funds (-$272 million) had the largest net outflows for taxable bond funds, while High Yield Muni Debt Funds had net-positive flows of $160 million.

Money Market Mutual Funds

Money market mutual funds had net outflows of $21.2 billion for the week. The largest net outflows for the week belonged to the Institutional U.S. Government Money Market Funds (-$9.2 billion) and Institutional U.S. Treasury Money Market Funds (-$9.0 billion) peer groups.

 

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