For the fourth week in a row investors were net purchasers of fund assets (including those of conventional funds and ETFs), injecting $37.2 billion. However, the headline number was a little misleading, with investors padding the coffers of money market funds to the tune of $33.1 billion, while equity funds (+$2.4 billion), taxable bond funds (+$1.6 billion), and municipal bond funds (+$100 million) all just managed to attract net new money for the week.
Despite another ballistic missile test by North Korea and a meltdown in mega-cap technology shares during the fund-flows week ended November 29, investors remained upbeat during the Thanksgiving-shortened trading week. Stocks rallied to record highs after forecasts from Adobe showed Black Friday sales online hit a record $5.0 billion and as the Senate Budget Committee voted 12-11 to advance the Republican tax bill, moving the proposed bill a step closer to a Senate vote. The Dow Jones Industrial Average Price Only Index closed the fund-flows week up 1.76%, while the NASDAQ Composite Price Only Index declined 0.63% after the NASDAQ suffered on November 29 its worst one-day selloff in three months.
U.S. markets were closed at the beginning of the fund-flows week in observance of the Thanksgiving holiday. Although the stock market closed early at 1:00 p.m. EST on Friday, investors pushed the S&P 500, the Russell 2000, and the NASDAQ Composite to new all-time highs after Adobe Analytics showed online shoppers had spent $1.52 billion on Thanksgiving Day and with pre-holiday sales data hinting at a firm 18% year-over-year growth in November sales. As has been a trend in the past the Monday following the Thanksgiving weekend was somewhat subdued; markets declined slightly, even as economic data showed October new-home sales hit their highest level in a decade. On Tuesday all three major indices closed at record highs as investors cheered the Republican tax bill’s moving toward a Senate vote, while shrugging off North Korea’s first ballistic missile test in more than two months. Investors also learned that the November consumer confidence index jumped to 129.5, beating analyst expectations, and that September home prices rose at their fastest rate in more than three years. While the Dow continued its march higher on Wednesday, November 29, the other major indices took a hit after selloffs in Facebook, Apple, and Amazon weighed on tech-heavy indices. Near-month crude oil prices continued to decline as investors mulled the upcoming meeting between the major oil producers.
Exchange-Traded Equity Funds
For the ninth week running equity ETFs witnessed net inflows, taking in a little less than $5.7 billion for the flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$3.4 billion), adding money to the group for the ninth week in a row. And for the twelfth straight week nondomestic equity ETFs took in net new money, this past week $2.3 billion. iShares Edge MSCI USA Momentum Factor ETF (MTUM, +$829 million), iShares Edge MSCI Minimum Volatility USA ETF (USMV, +$807 million), and iShares Edge MSCI USA Quality Factor ETF (QUAL, +$490 million) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum SPDR Dow Jones Industrial Average ETF (DIA, -$371 million) experienced the largest individual net redemptions, and PowerShares QQQ Trust 1 ETF (QQQ, -$323 million) suffered the second largest net redemptions of the week.
Exchange-Traded Fixed Income Funds
For the second week running fixed income ETFs witnessed net inflows, this past week taking in some $1.4 billion. APs padded the coffers of corporate investment-grade debt ETFs (+$724 million) and corporate high-yield ETFs (+$602 million) while turning their backs on government/Treasury ETFs, redeeming $50 million net. iShares iBoxx $ High Yield Corporate Bond ETF (HYG, +$323 million) and iShares Intermediate Credit Bond ETF (CIU, +$214 million) attracted the largest amounts of net new money of all individual fixed income ETFs, while iShares 10-20 Year Treasury Bond ETF (TLH, -$95 million) handed back the largest individual net redemptions for the week.
Conventional Equity Funds
For the thirty-sixth consecutive week conventional fund (ex-ETF) investors were net redeemers of equity funds, redeeming $3.2 billion for the flows week. Domestic equity funds, handing back a little more than $3.1 billion, witnessed their forty-eighth week of net outflows while posting a 0.93% return on average. Meanwhile, their nondomestic equity fund counterparts, posting a minus 0.19% return on average, witnessed net outflows (+$129 million) for the first week in eight. On the domestic equity side fund investors shunned large-cap funds (-$2.1 billion net), while on the nondomestic side they were net redeemers of global equity funds (-$309 million).
Conventional Fixed Income Funds
For the second consecutive week taxable bond funds (ex-ETFs) witnessed net inflows but took in only $141 million this past week. Fund investors padded the coffers of corporate investment-grade debt funds (+$440 million) and international & global debt funds (+$138 million). Corporate high-yield debt funds (-$292 million) witnessed the largest net redemptions for the week, bettered by balanced funds (-$133 million). Thomson Reuters Lipper’s Inflation-Protected Bond Funds classification witnessed its first week of net redemptions in four (-$37 million this past week) as investors considered the testimony of Jerome Powell—Trump’s pick to head the Federal Reserve Board—at his Senate confirmation hearing. Bank loan funds (-$67 million) witnessed their eighth consecutive week of net outflows. For the fourth week running municipal bond funds (ex-ETFs) witnessed net inflows, taking in some $39 million while posting a loss of 0.52% on average for the fund-flows week.
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