$2.6 Billion Outflow Breaks 3 – Week Streak

The Dow Jones Industrial Average closed the fund-flows week ended Wednesday, July 16, at a record high of 17,138.20. This record close was the Dow’s fifteenth for the year to date and was the result of a gain of 0.9% (152.59 points) for the five trading sessions.  

The market’s performance was spurred on by better-than-expected corporate earnings and merger-and-acquisition news. Among those posting better-than-expected results were financial heavyweights J.P. Morgan Chase, Goldman Sachs, and Citigroup. Citigroup’s earnings report came on the heels of the news of its $7-billion settlement with the U.S. Justice Department over its questionable mortgage-backed securities practices prior to the 2008 financial crisis. Deal news that sparked trading included Mylan Inc.’s announcing plans to buy part of Abbott Labs and Time Warner’s rejecting 21^st Century Fox’s $80-billion offer.

Overall, the week’s trading activity resulted in $2.6 billion of net outflows from funds, which broke a streak of three consecutive weeks of net inflows. Accounting for all of the net outflows were money market funds, which had $9.0 billion leave their coffers. The outflows from money market funds reversed a three-week trend of net inflows that had totaled $25.5 billion.

For the week taxable bond funds took in $1.9 billion net. Taxable bond mutual funds had $2.6 billion of positive flows, marking their twenty-eighth consecutive week of net inflows. Taxable bond exchange-traded funds (ETFs) had $588 million leave their coffers, for their sixth straight week of net outflows. Mutual funds in Lipper’s investment-grade bond funds classifications brought in over $1 billion net for the week. ETF investors sold off PIMCO 0-5 Year High Yield Corporate Bond Index (HYS, -$516 million) and iShares iBoxx $ High Yield Corporate Bond ETF (HYG, -$386 million).

Equity funds also experienced positive flows for the week, growing their coffers by $4.3 billion. The positive net flows came from equity ETFs (+$4.4 billion), while equity mutual funds had net outflows of $70 million. SPDR S&P 500 (SPY, +$4.1 billion) accounted for the lion’s share of the net inflows for equity ETFs.

Municipal bond funds had positive net flows of $158 million for the week. The majority of the net inflows came from the mutual funds side (+$114 million), while municipal bond ETFs had positive net flows of $44 million.

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