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September 21, 2018

Lipper U.S. Weekly FundFlows Insight Report: Funds Suffer Overall Net Outflows Driven by Money Market Funds

by Patrick Keon.

Lipper’s fund asset groups (including both mutual funds and ETFs) saw $15.1 billion net leave their coffers for the fund-flows week ended Wednesday, September 19. Money market funds (-$19.5 billion) were responsible for all the net outflows, while taxable bond funds (+$3.3 billion), equity funds (+$998 million), and municipal debt funds (+$141 million) all took in net new money.

Market Overview

The Dow Jones Industrial Average and the S&P 500 Index appreciated 1.56% and 0.66%, respectively, for the fund-flows week. The markets appeared to be taking the escalating trade tensions in stride. President Trump announced tariffs on another $200 billion of Chinese goods on Monday and followed that up later in the week with the threat of more tariffs on $267 billion of imports. In retaliation China stated it would implement tariffs on $60 billion of U.S. imports starting on September 24 and left the door open to add more if the U.S. continues to escalate. In other market news the ten-year Treasury note neared its most recent high (3.18% at the end of Q2 2011), closing the week at 3.07%, and there was speculation that next week’s Federal Reserve meeting could take a hawkish tone because of the recent strong economic and inflation data. The unemployment rate was at its lowest mark in almost 20 years, economic output was growing at its fastest rate since 2014, and the core Price Consumption Expenditures Index (the Fed’s preferred inflation measure) had hit the Fed’s 2.0% target rate in July for the third time this year.

ETFs

ETFs experienced net-positive flows (+$4.2 billion) for the second consecutive week. Taxable bond ETFs (+$2.2 billion) and equity ETFs (+$2.0 billion) were responsible for the overwhelming majority of the net inflows, while muni debt ETFs contributed $36 million to the total intake. SPDR Bloomberg Barclays High Yield Bond ETF (JNK, +$700 million) and iShares 20+ Year Treasury Bond ETF (TLT, +$256 million) had the largest individual net inflows on the taxable bond side of the ledger, while SPDR S&P 500 ETF (SPY, +$2.7 billion) posted the largest inflows for equity ETFs.

Equity Mutual Funds

Equity mutual funds (-$1.0 billion) experienced net outflows for the thirteenth straight week. Domestic equity funds (-$1.3 billion) were responsible for all the net outflows, while nondomestic equity funds took in $257 million of net new money. The largest net outflows among domestic equity funds belonged to the Large-Cap Core Funds peer group (-$499 million), while Global Equity Income Funds (+$589 million) had the largest net inflows for nondomestic equity funds.

Fixed Income Mutual Funds

The taxable bond (+$1.1 billion) and muni debt (+$105 million) mutual fund groups both took in net new money for the week. The Ultra-Short Obligation Funds peer group (+$302 million) had the highest net inflows for the taxable bond group, while High Yield Muni Debt Funds had net-positive flows of $156 million.

Money Market Mutual Funds

Money market funds suffered net outflows of $19.5 billion, thanks to the Institutional U.S. Government Money Market Funds peer group (-$19.8 billion). For the year-to-date period money market funds were down $19.0 billion.

 

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