May 4, 2018

U.S. Fund-Flows Weekly Report: Funds Take in Net New Money for the Second Straight Week

by Patrick Keon.

Thomson Reuters Lipper’s fund asset groups (including both mutual funds and ETFs) had net-positive flows of $2.5 billion for the fund-flows week ended Wednesday, May 2. The week’s net inflows followed the prior week’s $8.0 billion increase and were paced by the equity funds asset group (+$1.1 billion), followed by taxable bond funds (+$916 million) and money market funds (+$845 million). The municipal bond funds group (-$345 million) was the only one seeing its coffers shrink.

Market Overview

The Dow Jones Industrial Average and the S&P 500 Index both retreated during the fund-flows trading week; the indices closed down 0.66% and 0.14%, respectively. The week started off on the right foot with both indices up approximately 1.0% on the first trading day on the strength of solid Q1 2018 corporate earnings results. The increase was specifically driven by Facebook, which finished up 9.1% after announcing estimate-beating earnings. However, the markets gave back those gains (and more) as headwinds developed later in the week. Some of the obstacles faced by the markets included continued concern about U.S./China trade relations and a slump in healthcare stocks driven by news on Allergan and Celgene. At the end of the week the Federal Reserve announced it would leave interest rates unchanged this month. This reprieve appeared to be short term in nature on speculation that the Fed will raise rates at its June meeting, thanks to an inflation rate that is approaching its target and expected to remain there in the medium term.

ETFs

ETFs had positive net inflows (+$4.2 billion) for the fourth straight week. The net inflows were driven mainly by the equity (+$2.7 billion) and taxable bond (+$1.4 billion) asset classes. The largest net inflows among equity ETFS belonged to SPDR S&P 500 ETF (SPY, +$1.5 billion) and Utilities Select Sector SPDR ETF (XLU, +$675 million). For taxable bond ETFs iShares iBoxx $High Yield Corporate Bond ETF (HYG, +$792 million) and SPDR Bloomberg Barclays High Yield Bond ETF (JNK, +$476 million) led the pack. Municipal bond ETFs contributed $10 million of net inflows.

Equity Mutual Funds

Equity mutual funds saw $1.6 billion leave their coffers for the week. In a continuation of the long-term trend domestic equity funds (-$2.0 billion) were responsible for all the net outflows, while nondomestic equity funds took in $421 million of net new money. The largest net-positive flows among nondomestic equity funds belonged to Lipper’s Emerging Markets Funds peer group (+$173 million), and the largest net-negative flows for domestic equity funds were attributable to Large-Cap Growth Funds (-$480 million).

 Fixed Income Mutual Funds

Taxable bond mutual funds (-$511 million) and municipal bond mutual funds (-$355 million) both suffered net outflows for the week. The largest net outflows for taxable bond funds belonged to High Yield Funds (-$639 million), while for the muni debt funds group the largest net outflows came from the Short/Intermediate Muni Debt Funds (-$126 million) and General Muni Debt Funds (-$118 million) groups.

Money Market Mutual Funds

Money market mutual funds (+$845 million) had net inflows for the second straight week. This past week’s net inflows were mainly the result of the Money Market Funds (+$1.7 billion), U.S. Government Money Market Funds (+$1.3 billion), and U.S. Treasury Money Money Market Funds (+$724 million) peer groups all experiencing positive net flows.

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