Lipper Fund Flows: $1 Billion Exit Mutual Funds Amidst Grim Housing News

The Dow Jones Industrial Average closed slightly up for the week ended Wednesday, March 26th with the Dow gaining 0.3% (46.82 points) to close the week at 16,268.99. The abnormally harsh winter weather most of the country experienced this year took its toll on economic news that was released during the week. Both new single-family home sales and existing home sales declined in February in what many analysts thought was a direct correlation to the winter weather. New single-family home sales fell 3.3% to an annual rate of 440,000, and existing home sales were off 0.4% to 4.6 million. However, new orders for durable goods bounced back from declines in December and January with an increase of 2.2% for February.

The week also marked the second consecutive week of mutual fund net outflows as $1.0 billion left their coffers. Equity funds (-$379 million) had negative flows after six straight weeks of net inflows. Equity mutual funds had net inflows of $1.7 billion, while equity exchange-traded funds (ETFs) experienced net losses of $2.1 billion. The positive net flows for equity mutual funds were spread out among a multitude of groups, with Lipper’s International Multi-Cap Core Funds classification having the top draw for the week with positive flows of $520 million. Equity ETF investors sold off Powershares QQQ Trust, Series 1 (QQQ, -$1.0 billion), Health Care Select Sector SPDR Fund (XLV, -$514 million), and Industrial Select Sector SPDR Fund (XLI, -$512 million).

Taxable bond funds (+$2.9 billion net) experienced their third straight week of positive flows. The lion’s share of these inflows (+$2.8 billion) went into taxable bond mutual funds. Of note, loan participation mutual funds (+$250 million) experienced their ninety-third straight week of positive flows. Taxable bond ETFs had positive net flows of $174 million. Investors were buying iShares 20+ Year Treasury Bond ETF (TLT, +$262 million) and iShares US Preferred Stock ETF (PFF, +$164 million).

Municipal bond funds had negative net flows for the week (-$212 million) on the heels of six straight weeks of net inflows. Municipal bond mutual funds (-$317 million) accounted for all of the net outflows. Money market funds had their fourth consecutive week of negative flows; they witnessed $3.4 billion leaving their coffers.

For more information on this week’s Lipper fund flows data, please refer to Lipper’s U.S. Fund Flows website or this video.

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