by Tom Roseen.
For the third consecutive week, investors were overall net purchasers of fund assets (including those of conventional funds and ETFs), injecting $1.4 billion for Lipper’s fund-flows week ended April 10, 2019. Fund investors were net purchasers of taxable fixed income funds (+$4.8 billion), equity funds (+$4.3 billion), and municipal bond funds (+$956 million), while being net redeemers of money market funds (-$8.6 billion).
Markets generally continued their upward trek during the fund-flows week, with investors embracing news about advances in the China/U.S. trade negotiations, the Federal Reserve’s continued dovish tone, and a better-than-expected March nonfarm payrolls report. The Dow Jones Industrial Average Price Only Index (-0.23%) suffered the only negative return during the flows week of the broadly followed U.S. indices. The Russell 2000 Price Only Index (+1.32%) posted the strongest returns of the broad-based U.S. indices for the flows week, followed by the NASDAQ Composite Price Only Index’s 0.87% and the S&P 500 Price Only Index’s 0.52% plus-side returns. Concerns about Brexit and new threats by the U.S. to apply tariffs on $11 billion of European goods led to mixed returns in overseas markets, with the Shanghai Composite Price Only Index (+0.66%) and the Nikkei 225 Price Only Index (+0.38%) posting plus-side returns, while the FTSE 100 Price Only Index (-0.48%) and the Xetra DAX Total Return Index (-0.21%) posted losses for the week.
On Thursday, April 4, the U.S.-Chinese trade deal remained a focus for investors. Both Chinese and U.S. officials hinted they were in the final round of discussions. Markets benefitted from the news that new applicants for unemployment benefits declined more than analysts expected in the week prior, dropping to their lowest level since December 6, 1969. Market enthusiasm remained guarded, however, after data showed Germany’s industrial production decline worsened in February. On Friday, the S&P 500 logged its seventh straight positive day—its longest winning streak since it logged eight consecutive positive days in October 2017—after investors learned the U.S. economy added 196,000 jobs in March, beating analyst expectations of 177,000. Wage growth remained modest and the unemployment rate was steady at 3.8%.
On Monday, April 8, the S&P 500 closed higher for the eighth consecutive day—tying the winning streak from October 2017—ahead of the start of the Q1 2019 earnings season. However, investors remained cautious after learning February factory orders fell more than economists expected. On Tuesday, the S&P 500 snapped its winning streak after President Donald Trump threatened to slap tariffs on European goods in retaliation against subsidies for aircraft manufacturer Airbus SE, and after investors learned the International Monetary Fund lowered its outlook for global economic growth in 2019 to 3.3%. Despite learning that March consumer prices rose at the fastest pace in 14 months, the markets closed higher on Wednesday, April 10, after the Federal Reserve Board minutes from its March meeting reassured investors that it was in no hurry to hike interest rates, and its views on inflation remained tame.
Exchange-Traded Equity Funds
For the second week in a row, equity ETFs witnessed net inflows, taking in a little less than $10.3 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$9.2 billion) for the second consecutive week. Meanwhile, nondomestic equity ETFs also witnessed net inflows for the second week in a row, taking in $1.1 billion this past week. SPDR S&P 500 ETF (SPY, +$3.6 billion) and Invesco QQQ Trust 1 (QQQ, +$1.5 billion) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, iShares MSCI EAFE ETF (EFA, -$1.6 billion) experienced the largest individual net redemptions and SPDR Gold ETF (GLD, -$259 million) suffered the second largest net redemptions of the week.
Exchange-Traded Fixed Income Funds
For the fifth week in a row, taxable fixed income ETFs witnessed net inflows, taking in $2.0 billion. APs were net purchasers of corporate investment-grade debt ETFs (+$1.6 billion) and government-Treasury ETFs (+$537 billion), while being net redeemers of international & global debt ETFs (-$661 million). iShares U.S. Treasury Bond ETF (GOVT, +$757 million) and iShares 20+ Year Treasury Bond ETF (TLT, +$571 million) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, iShares 1-3 Year Treasury Bond ETF (SHY, -$815 million) and iShares JP Morgan USD Emerging Markets Bond ETF (EMB, -$614 million) handed back the largest individual net redemptions for the week. For the eighth week in nine, municipal bond ETFs witnessed net inflows, taking in $123 million.
Conventional Equity Funds
For the eighth week running, conventional fund (ex-ETF) investors were net redeemers of equity funds, withdrawing $6.0 billion. Domestic equity funds, handing back a little more than $4.4 billion, also witnessed their eighth weekly net outflows while posting a 0.66% return on average for the fund-flows week. Their nondomestic equity fund counterparts, posting a 0.44% return on average, witnessed their third consecutive weekly net outflows (-$1.6 million this past week). On the domestic equity side, fund investors gave a cold shoulder to large-cap funds (-$2.8 billion net) and small-cap funds (-$523 million), while investors on the nondomestic equity side were net sellers of international equity funds (-$1.4 billion) and global equity funds (-$171 million).
Conventional Fixed Income Funds
For the thirteenth consecutive week, taxable bond funds (ex-ETFs) witnessed net inflows, taking in $2.8 billion this past week while posting a 0.30% return for the flows week. Fund investors were net purchasers of corporate investment-grade debt funds (+$1.9 billion) and international & global debt funds (+$562 million), while flexible funds (-$297 million) suffered the largest net redemptions of the group. For the fourteenth straight week, municipal bond funds (ex-ETFs) witnessed net inflows—taking in $833 million—while posting a 0.07% gain on average (their eleventh consecutive weekly gain).