Lipper U.S. Weekly FundFlows Insight Report: Funds Take in Net New Money Driven by Demand for Taxable Bond Funds

Lipper’s fund asset groups (including both mutual funds and ETFs) experienced net inflows of $1.9 billion for the fund-flows trading week ended Wednesday, April 3. Taxable bond funds (+$3.7 billion) took in the most net new money, while money market funds (+$1.4 billion) and municipal debt funds (+$714 million) also contributed to the net positive flows. Equity funds (-$3.9 billion) were the lone asset group to experience net outflows.

Market Overview

The major equity indices all posted positive returns for the fund-flows trading week. The NASDAQ Composite Index (+3.30%) led the gains, while the S&P 500 Index and the Dow Jones Industrial Average posted solid increases of 2.42% and 2.31%, respectively. All of the indices recorded double-digit gains, paced by the NASDAQ (+16.49%) and followed by the S&P 500 (+13.07%) and the Dow (+11.15%). The markets took strength on optimism over the progress of trade talks between the U.S. and China, as well as better than expected manufacturing data from the same two countries. The manufacturing data eased concerns about slowing global economic growth, while both the U.S. and China gave bullish indicators in regard to their trade war. U.S. Treasury Secretary Steven Mnuchin stated that “constructive” negotiating sessions were taking place between the two sides and China announced that it would suspend additional tariffs on U.S. autos and auto parts as a sign of goodwill for the continuing trade talks.

ETFs

The ETF universe experienced net positive flows of $7.2 billion for the week. Equity ETFs (+$4.5 billion) and taxable bond ETFs (+$2.8 billion) were responsible for the net inflows, while muni debt ETFs saw $73 million leave their coffers. For equity ETFs, the largest individual net inflows belonged to SPDR S&P 500 ETF (SPY, +$2.9 billion) and iShares Core S&P 500 ETF (IVV, +$1.4 billion), while Invesco QQQ Trust (QQQ, -$1.1 billion) had the largest net outflow. For taxable bond ETFs, iShares iBoxx $High Yield Corporate Bond ETF (HYG, +$912 million) had the largest net positive flow, while iShares Floating Rate Bond ETF (FLOT, -$255 million) saw the most money leave.

Equity Mutual Funds

After a promising start to the year (six consecutive weekly net inflows), equity mutual funds suffered their seventh consecutive weekly net outflows this week (-$8.4 billion). Over these seven weeks, equity mutual funds have seen more than $33.4 billion leave their coffers. This week’s net outflows were mainly attributable to domestic equity funds (-$6.7 billion), while nondomestic equity funds also contributed $1.7 billion to the total net outflows. Domestic equity funds have experienced eight straight net outflows for a total net negative flow of $25.9 billion, while nondomestic equity funds have only had two consecutive net outflows.

Fixed Income Mutual Funds

Muni debt funds (+$787 million) extended their consecutive weekly net inflow streak to 13, while taxable bond funds (+$922 million) made it 12 weeks in a row. The Core Plus Bond Funds (+$1.1 billion) and the Core Bond Funds (+$1.0 billion) peer groups led the charge for taxable bond funds, while Intermediate Muni Debt Funds (+$301 million) and High Yield Muni Debt Funds ($+260 million) had the largest net inflows among the tax-exempt peer groups.

Money Market Mutual Funds

Money market funds (+$1.4 billion) took in net new money for the second consecutive week. Significant net inflows into the Money Market Funds (+$3.8 billion), U.S. Government Money Market Funds (+$3.4 billion), and Institutional Money Market Funds (+$3.2 billion) peer groups were almost completely offset by the net outflows from Institutional U.S. Government Money Market Funds (-$10.3 billion).