Lipper U.S. Weekly FundFlows Insight Report: Fixed Income Funds Drive Overall Net Inflows for the Week

Lipper’s fund asset groups (including both mutual funds and ETFs) had net inflows of slightly less than $3.0 billion for the fund-flows trading week ended Wednesday, March 13. Fixed income funds led the net positive flows as taxable bond funds and municipal debt funds grew their coffers by $2.6 billion and $1.6 billion, respectively. Equity funds contributed $891 million to the total net inflows, while money market funds suffered net outflows of $2.2 billion.

Market Overview

The major equity indices all recorded positive returns for the fund-flows trading week. The NASDAQ Composite paced the increases at 1.83%, while the S&P 500 Index and Dow Jones Industrial Average were up 1.42% and 0.11%, respectively. The indices started off the week slowly but sprinted to the finish thanks to a rally in the technology sector and some favorable economic data. Weak job numbers (the economy added only 20,000 new jobs in February) contributed to the sluggish start to the week, but things took a turn for the better over the weekend with Federal Reserve Chairman Jerome Powell’s interview on “60 Minutes.” Powell stated that while the economy had slowed a bit, he believes “there’s no reason why this economy cannot continue to expand.” This interview, coupled with strong reports from key economic statistics (increases in core capital spending and construction spending) and tame inflation data (the Consumer Price Index posted its smallest annual gain in more than two years), provided the tailwinds needed for the market to finish the week on a high note.

ETFs

ETFs took in $6.8 billion in net new money as equity ETFs (+$4.3 billion), taxable bond ETFs (+$2.0 billion), and muni debt ETFs (+$416 million) all experienced net inflows. The largest net positive flows for individual equity ETFs belonged to iShares Core S&P 500 ETF (IVV, +$4.0 billion) and iShares Core MSCI EAFE ETF (IEFA, +$881 million). On the fixed income side of things, SPDR Bloomberg Barclays High Yield Bond ETF (JNK, +$880 million) led the taxable bonds group, while iShares National Municipal Bond ETF (MUB, +$308 million) paced the muni debt group.

Equity Mutual Funds

Equity mutual funds (-$3.4 billion) experienced net outflows for the fourth straight week. The net negative flows came from both nondomestic equity funds (-$1.9 billion) and domestic equity funds (-$1.5 billion). The Global Equity Income Funds (-$963 million) and Small-Cap Core Funds (-$246 million) peer groups had the largest net outflows from the two groups. Equity mutual funds have taken in $5.0 billion year-to-date after recording net outflows of more than $140 billion in 2018.

Fixed Income Mutual Funds

Both the muni debt (+$1.2 billion) and taxable bond (+$585 million) mutual fund groups posted net positive flows for the week. It was the tenth straight week of net inflows for muni debt funds and the ninth for taxable bond funds. The High Yield Muni Debt Funds (+$353 million) and Intermediate Muni Debt Funds (+$350 million) led the muni debt funds group, while Ultra Short Obligation Funds (+$1.0 billion) and Core Plus Bond Funds (+$968 million) paced taxable bond funds.

Money Market Mutual Funds

For the first week in three, money market funds (-$2.2 billion) saw money leave their coffers. The net inflows were driven by Institutional U.S. Government Money Market Funds (-$5.0 billion) and Institutional Money Market Funds (-$1.6 billion), while Institutional U.S. Treasury Money Market Funds had net inflows of $3.8 billion for the week.