U.S. Fund-Flows Weekly Report: Money Market Funds Once Again Pace Net Outflows

Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) experienced net outflows of $13.4 billion for the fund-flows week ended Wednesday, September 7. Money market funds, which have had net outflows of more than $15 billion in three of the last four weeks, were responsible for the lion’s share of negative flows; they saw $17.5 billion leave their coffers. Equity funds (-$271 million) also contributed to the overall net outflows, while taxable bond funds (+$3.4 billion) and municipal bond funds (+$986 million) both took in net new money.

After two consecutive down weeks the S&P 500 Index recorded a gain of 0.7% (15.21 points) for the fund-flows trading week. The week’s increase put the index up just shy of 7.0% for the year to date. The market took strength from weak economic data that cast doubt on whether the Federal Reserve will be able to raise interest rates this year. The first bit of news hampering the Fed was the jobs report that came in lower than expected; the U.S. economy created just 151,000 new jobs for August, well short of the Street consensus of 180,000 jobs. Later in the trading week data from the Institute for Supply Management also moved the Fed farther away from its rate-hike plans. The Institute’s nonmanufacturing index fell to 51.4% for August from 55.5% for July, marking the index’s slowest growth since 2010.

Equity mutual funds (-$4.4 billion) suffered their twenty-sixth consecutive weekly net outflows, while equity ETFs took in $4.2 billion of net new money. Domestic equity funds (-$3.1 billion) were once again responsible for most of the mutual fund outflows, while nondomestic equity funds saw $1.3 billion leave. For the year-to-date period domestic equity funds were down approximately $119 billion, while nondomestic equity funds had net outflows of just $3.5 billion. On the ETF side the largest net inflows for the week belonged to SPDR S&P 500 ETF (SPY, +$2.5 billion) and iShares Core S&P 500 (IVV, +$574 million).

Conversely, all the net inflows for taxable bond funds belonged to mutual funds (+$3.9 billion), while ETFs had net outflows of $471 million. On the mutual fund side the largest positive flows belonged to Lipper’s Core Bond Funds and Core Plus Bond Funds classifications; each took in roughly $1.1 billion of net new money. iShares 20+ Treasury Bond (TLT, -$363 million) and iShares iBoxx $IG Corp (LQD, -$221 million) had the largest net outflows among the ETFs.

Municipal bond mutual funds raised their consecutive net-inflows streak to 49 weeks with positive flows of $1.1 billion. The largest net inflows among the muni bond group last week belonged to General and Insured Muni Debt Funds (+$261 million) and High Yield Muni Debt Funds (+$260 million).

The net outflows from money market funds (-$17.5 billion) for the week pushed the group’s year-to-date net outflows to $97.7 billion. The largest moves in this past week’s results belonged to Institutional Money Market Funds (-$29.2 billion net) and Institutional U.S. Government Money Market Funds (+$10.2 billion net).