U.S. Fund-Flows Weekly Report: Net Outflows From Money Market Funds Dominate the Week

Lipper’s fund asset groups (including both mutual funds and ETFs) had net outflows of $2.9 billion for the fund-flows week ended Wednesday, July 18. Money market funds (-$6.5 billion) were responsible for all the net-negative flows, while all the other fund asset groups experienced net-positive flows. Municipal bond funds (+$1.3 billion) had the largest net inflows, followed closely by taxable bond funds (+$1.2 billion) and equity funds (+$1.1 billion).

Market Overview

Both the Dow Jones Industrial Average (+2.02%) and the S&P 500 Index (+1.50%) appreciated for the third straight fund-flows trading week. For this period the Dow and the S&P 500 were up 4.49% and 4.30%, respectively. There were plenty of positive events during the week that outweighed the continued undercurrent of a possible trade war, including the start of the second quarter earnings season. That got off to a positive start as the Bank of America exceeded expectations on the first day of what was anticipated to be a strong corporate-earnings reporting period. In other significant news Federal Reserve Chairman Jerome Powell stated in testimony before the Senate Banking Committee that he believes the “best way forward is to keep gradually raising the federal-funds rate for now.” This was viewed as a positive indicator, since it had been feared the Fed would take a more aggressive approach to interest rates in response to inflation and the expanding economy.

ETFs

ETFs had net inflows (+$5.6 billion) for the second straight week. All three asset groups took in net-new money, led by equity ETFs (+$5.0 billion). The largest net inflows among equity ETFs belonged to Invesco QQQ Trust (QQQ, +$1.7 billion) and JPMorgan BetaBuilders Japan ETF (BBJP, +$835 million). Taxable bond ETFs had net inflows of $528 million led by iShares JPMorgan USD Emerging Markets Bond ETF (EMB, +$271 million) and SPDR Bloomberg Barclays High Yield Bond ETF (JNK, +$232 million). Municipal bond ETFs had net inflows of $74 million for the week.

Equity Mutual Funds

Equity mutual funds (-$3.9 billion) experienced their fourth straight week of net outflows. Both domestic equity funds (-$2.7 billion) and nondomestic equity funds (-$1.2 billion) contributed to the total net outflows.

Fixed Income Mutual Funds

The muni debt (+$1.2 billion) and taxable bond (+$652 million) fund groups both took in net-new money for the week. Muni bond funds had their second straight week of net inflows, paced by the Intermediate Muni Debt Funds (+$518 million) and High Yield Muni Debt Funds (+$320 million) peer groups. The largest net inflows for taxable bond funds belonged to the Ultra-Short Obligation Funds (+$826 million) category.

Money Market Mutual Funds

Money market funds (-$6.5 billion) were the only asset group that suffered net outflows for the week. These net outflows were mostly attributable to the Institutional U.S. Treasury Money Market Funds (-$8.4 billion) and Institutional U.S. Government Money Market Funds (-$5.0 billion) peer groups. Institutional Money Market Funds and Money Market Instrument Funds had net inflows of $3.2 billion and $3.1 billion, respectively.