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February 23, 2018

U.S. Fund-Flows Weekly Report: All Four Fund Macro-Groups Take in Net New Money for the Week

by Patrick Keon.

Thomson Reuters Lipper’s fund asset groups (including both mutual funds and ETFs) took in net-positive flows of almost $16.0 billion for the fund-flows week ended Wednesday, February 21. All the fund macro-groups experienced positive net flows, led by money market funds (+$12.3 billion), followed by taxable bond funds (+$2.2 billion), equity funds (+$1.1 billion), and municipal bond funds (+$347 million).

Market Overview

The S&P 500 Index managed to post a small gain (+0.10%) for the fund-flows trading week, while the Dow Jones Industrial Average retreated 0.38%. After six consecutive winning sessions for both the Dow and the S&P, volatility came to the forefront again on February 21, thanks to the release of the Federal Open Market Committee (FOMC) meeting minutes. The FOMC minutes renewed interest rate fears as the Fed indicated it views the economy as stronger than it was at year-end and that interest rate hikes would be needed in 2018. The Dow experienced an almost-500-point decrease—after rising 303 points on the day—to close down 167 points after the release of the minutes.

ETFs

ETFs suffered net outflows (-$1.2 billion) for the third straight week. The lion’s share of the negative net flows came from equity ETFs (-$2.5 billion), while muni bond ETFs contributed $19 million to the outflows. The largest net outflows for individual equity ETFs came from SPDR S&P 500 ETF (SPY, -$4.2 billion) and iShares Russell 2000 ETF (IWM, -$1.5 billion). Taxable bond ETFs took in new money of $1.3 billion net for the week, paced by SPDR Bloomberg Barclays High Yield Bond ETF (JNK, +$453 million) and iShares Short Treasury Bond ETF (SHV, +$243 million).

Equity Mutual Funds

Equity mutual funds had net-positive flows (+$3.6 billion) for a second consecutive week. The net inflows went into both nondomestic equity funds (+$2.8 billion) and domestic equity funds (+$756 million). The largest net inflows among nondomestic equity funds and domestic equity funds belonged to Lipper’s International Multi-Cap Growth Funds (+$871 million) and S&P 500 Index Funds (+$431 million) classifications, respectively.

Fixed Income Mutual Funds

Taxable bond funds (+$935 million) and municipal bond funds (+$366 million) both had net inflows for the week. For taxable bond funds the Core Bond Funds (+$838 million) and Core Plus Bond Funds (+$230 million) peer groups led the net-positive flows, while for muni bond funds the Intermediate Muni Debt Funds (+$477 million) group was responsible for all the net inflows.

Money Market Mutual Funds

Money market mutual funds took in $12.3 billion of net new money for the week. The largest net inflows for the week belonged to the Institutional U.S. Government Money Market Funds (+$6.8 billion) and Institutional U.S. Treasury Money Market Funds (+$5.1 billion) classifications, while the U.S. Government Money Market Funds peer group saw $3.4 billion leave its coffers.

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