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May 18, 2018

U.S. Fund-Flows Weekly Report: Funds Experience Second Largest Weekly Net Inflows of the Year to Date

by Patrick Keon.

Thomson Reuters Lipper’s fund asset groups (including both mutual funds and ETFs) had net-positive flows of $26.5 billion for the fund-flows week ended Wednesday, May 16. The week’s net inflows were the second largest for 2018, trailing only the $37.8-billion increase for the fund-flows week ended January 24. All four of the asset classes took in net new money for the week, paced by money market funds (+$13.6 billion) and equity funds (+$10.1 billion). Taxable bond funds and municipal bond funds contributed $2.6 billion and $207 million, respectively, to the week’s total net inflows.

Market Overview

The Dow Jones Industrial Average and the S&P 500 Index both posted positive returns for the fund-flows trading week; the indices closed up 0.92% and 0.91%, respectively. The Dow rode a rally in the technology sector, a decrease in volatility, and softer inflation data (easing interest rate concerns) to eight consecutive winning sessions, its longest winning streak since last September (nine straight gains). The current streak was broken on Tuesday, May 15, as a solid U.S. retail sales report sparked selling in the Treasurys market. This selling caused the yield on the ten-year Treasury to close the week at 3.10%—a seven-year high.

ETFs

ETFs had positive net flows (+$11.2 billion) for the sixth straight week. The net inflows were driven by the equity (+$9.2 billion) and taxable bond (+$2.2 billion) asset classes. The largest net inflows among equity ETFS belonged to SPDR S&P 500 ETF (SPY, +$5.1 billion) and iShares Edge MSCI USA Momentum Factor ETF (MTUM, +$510 million). For taxable bond ETFs iShares iBoxx $Investment Grade Corporate Bond ETF (LQD, +$604 million) and iShares JP Morgan USD Emerging Markets Bond ETF (EMB, +$303 million) led the pack. Municipal bond ETFs had net outflows of $111 million for the week.

Equity Mutual Funds

Equity mutual funds took in $887 million of net new money for the week. Both nondomestic equity funds (+$784 million) and domestic equity funds (+$104 million) had net-positive flows. The largest net-positive flows among these asset classes belonged to International Multi-Cap Core Funds (+$412 million) and Multi-Cap Core Funds (+$618 million).

Fixed Income Mutual Funds

Taxable bond mutual funds (+$473 million) and municipal bond mutual funds (+$318 million) both had net inflows for the week. The largest net inflows for taxable bond funds belonged to Loan Participation Funds (+$518 million), while for muni debt funds the High Yield Muni Debt Funds (+$408 million) peer group had the largest net inflows.

Money Market Mutual Funds

Money market mutual funds took in $13.6 billion of net money—for their fourth straight weekly net inflows. The Institutional U.S. Government Money Market Funds (+$10.1 billion) and U.S. Government Money Money Market Funds (+$2.1 billion) peer groups were responsible for the majority of the positive net flows.

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