January 26, 2018

U.S. Fund-Flows Weekly Report: Equity Funds Pace Positive Weekly Net Inflows

by Patrick Keon.

Thomson Reuters Lipper’s fund asset groups (including both mutual funds and ETFs) grew their coffers by $37.8 billion for the fund-flows week ended Wednesday, January 24. All four fund macro-groups took in net new money for the week, with equity funds (+$23.4 billion) leading the pack, followed by money market funds (+$8.2 billion), taxable bond funds (+$5.4 billion), and municipal bond funds (+$782 million).

Market Overview

Both the Dow Jones Industrial Average and the S&P 500 Index built on their strong performances of the year to date; the S&P 500 gained 1.25% and the Dow appreciated 0.52% for the fund-flows week. For the year to date the Dow and the S&P 500 were up 6.20% and 6.13%, respectively. The markets took strength this past week from better-than-expected corporate earnings reports and the government’s avoidance of a long-term shutdown. With the uncertainty of the impact from a government shutdown taken out of the equation (at least for now), corporate earnings drove the markets during what was an otherwise slow week for economic data. One of the companies beating their earnings forecasts and reaping the benefits was Netflix. Shares of Netflix experienced a one-day gain of 9.98% to reach an all-time high, which drove the stock over the $100-billion market-capitalization barrier for the first time.

ETFs

ETFs took in $23.8 billion of net new money for the week, the lion’s share of which was attributable to equity ETFs (+$23.3 billion). SPDR S&P 500 ETF (SPY, +$13.8 billion) had the largest net inflow for individual equity ETFs, followed by PowerShares QQQ Trust (QQQ, +$1.2 billion). Taxable bond ETFs (+$472 million) also were on the plus side for the week, led by iShares JP Morgan USD Emerging Market ETF (EMB, +$300 million) and SPDR Portfolio Aggregate Bond ETF (SPAB, +$259 million). Municipal bond ETFs suffered net outflows of $18 million for the week.

Equity Mutual Funds

Equity mutual funds managed a slight net inflow of $137 million for the week. As has been the long-term trend, nondomestic equity funds took in net new money (+$2.2 billion) while domestic equity funds (-$2.1 billion) saw money leave. The largest net outflows among domestic equity funds belonged to Lipper’s Large-Cap Core Funds classification (-$776 million), while the largest net inflows for nondomestic equity funds were attributable to Emerging Markets Funds (+$535 million).

Fixed Income Mutual Funds

Taxable bond mutual funds experienced net inflows (+$4.9 billion) for the fourth straight week. Core Bond Funds (+$1.5 billion) and Core Plus Bond Funds (+$1.2 billion) continued to attract interest from investors, while investors shied away from High Yield Funds (-$510 million). Municipal bond mutual funds had positive net flows of $799 million, led by General Muni Debt Funds (+$800 million) and Intermediate Muni Debt Funds (+$314 million).

Money Market Mutual Funds

Money market mutual funds had net-positive flows of $8.2 billion for the week. The Institutional U.S. Government Money Market Funds (+$4.0 billion) and Institutional Money Market Funds (+$2.0 billion) categories had the largest net inflows.

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