September 7, 2018

U.S. Weekly FundFlows Insight Report: Funds Take in $3.3 Billion of Net New Money, Thanks to Money Market Funds

by Patrick Keon.

Lipper’s fund asset groups (including both mutual funds and ETFs) had net-positive flows of $3.3 billion for the fund-flows week ended Wednesday, September 5. Money market funds (+$11.8 billion) were responsible for all the net inflows, while equity funds (-$7.2 billion), taxable bond funds (-$1.1 billion), and municipal debt funds (-$181 million) saw money leave.

Market Overview

The S&P 500 Index and the Dow Jones Industrial Average lost 0.87% and 0.57%, respectively, for the fund-flows week. Both indices suffered the lion’s share of their losses on the first trading day of the week as the markets were stung by the resurfacing of trade-war concerns. There were reports that President Donald Trump was prepared to impose tariffs on another $200 billion of imports from China when the public comment period on the proposal expires on September 6. Economic news released during the week continued to point toward a strong economy. The core Price Consumption Expenditures (PCE) year-to-year index grew to 2.0% for July, up from 1.9% for June. The core PCE is the Federal Reserve’s preferred inflation measure, and July’s number represented the third time this year the index has hit the Fed’s 2.0% target rate. The Commerce Department reported that U.S. consumer spending grew 0.4% for the second consecutive month in July. It was believed consumer spending is taking strength from the labor market, which is near full employment.

ETFs

ETFs saw net money leave (-$4.6 billion) breaking a streak of eight straight weekly net inflows. All three asset groups suffered net outflows, led by equity ETFs (-$3.6 billion), bettered by taxable bond ETFs (-$939 million) and muni debt ETFs (-$43 million). SPDR S&P 500 ETF (SPY, -$9.1 billion) and iShares iBoxx $Investment Grade Corporate Bond ETF (LQD, -$1.5 billion) had the largest individual net outflows among equity ETFs and taxable bond ETFs, respectively.

Equity Mutual Funds

Equity mutual funds (-$3.6 billion) experienced net outflows for the eleventh straight week. Domestic equity funds (-$3.4 billion) were responsible for the lion’s share of the net outflows, while nondomestic equity funds saw $232 million net leave. The largest net outflows among the respective peer groups belonged to Large-Cap Value Funds (-$928 million) and International Large-Cap Growth Funds (-$669 million).

Fixed Income Mutual Funds

The taxable bond (-$173 million) and muni debt (-$138 million) mutual fund groups both suffered minor net outflows for the week. The High Yield Funds (-$242 million) and Short Muni Debt Funds (-$48 million) peer groups suffered the largest net outflows for the two macro groups.

Money Market Mutual Funds

Money market funds took in $11.8 billion of net new money for the week. All the money market peer groups had net inflows for the week, led by Institutional U.S. Treasury Money Market Funds (+$6.2 billion) and Institutional U.S. Government Money Market Funds (+$2.6 billion).

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