by Pat Keon, CFA.
Lipper’s fund asset groups (including both mutual funds and ETFs) had net positive flows of $12.6 billion for the fund-flows trading week ended Wednesday, May 8. Money market funds (+$22.0 billion) paced the net inflows, followed by the taxable bond funds (+$1.8 billion) and municipal debt funds (+$1.5 billion) asset groups. Equity funds were the only group to suffer net outflows, as they saw $12.7 billion leave their coffers.
The major equity indices all finished the fund-flows trading week in the red. The Dow Jones Industrial Average took the biggest hit (-1.75%), followed by the S&P 500 Index (-1.52%) and the NASDAQ Composite Index (-1.32%). The markets suffered the majority of their losses for the week on one trading day (Tuesday, May 7) as trade tensions between the U.S. and China rose to the forefront again. On this day, the U.S. confirmed it had plans to increase tariffs (from 10% to 25%) on $200 billion of Chinese goods on Friday, May 10. Treasury Secretary Steven Mnuchin indicated this course of action was in response to China trying to walk back some agreements from prior trade talks.
The ETF universe suffered net outflows of $11.6 billion, its worst weekly net negative flow since the fund-flows week ended January 30, 2019 (-$14.7 billion). Equity ETFs (-$10.4 billion) accounted for the lion’s share of this week’s net outflows and it was also their worst week since January 30 (-$14.6 billion). SPDR S&P 500 ETF (SPY, -$7.3 billion) and Invesco QQQ Trust (QQQ, -$2.5 billion) were responsible for the majority of the net outflows among equity ETFs. Taxable bond ETFs (-$1.4 billion) also saw money leave their coffers last week. The largest net negative flows for this group belonged to iShares 20+ Years Treasury Bond ETF (TLT, -$871 million) and SPDR Bloomberg Barclays High Yield Bond ETF (JNK, -$654 million). Muni debt ETFs experienced their fifth straight weekly net inflows as the group took in $237 million in net new money.
Equity Mutual Funds
Equity mutual funds suffered their twelfth consecutive weekly net outflows this week (-$2.3 billion). Domestic equity funds (-$2.1 billion) were responsible for most of the net outflows, while nondomestic equity funds also contributed $200 million to the total. At the peer group level, Multi-Cap Core Funds (-$304 million) and Global Multi-Cap Core Funds (-$140 million) had the largest net negative flows among the domestic and nondomestic groups.
Fixed Income Mutual Funds
Municipal bond funds (+$1.3 billion) and taxable bond funds (+$3.2 billion) extended their consecutive net inflow streaks to 18 and 17 weeks, respectively. The Core Plus Bond Funds (+$1.1 billion) and the Core Bond Funds (+759 million) peer groups led the charge on the taxable bond fund side of the ledger, while High Yield Muni Debt Funds (+$371 million), General Muni Debt Funds (+$334 million), and Intermediate Muni Debt Funds (+$332 million) all contributed relatively equally to the increase on the tax-exempt side.
Money Market Mutual Funds
Money market funds took in almost $22.0 billion in net new money for the week. It was the group’s third straight weekly net increase after suffering net outflows of $54.5 billion (the group’s largest this year) for the fund-flows week ended April 17. The largest net inflows this week belonged to the Institutional U.S. Government Money Market Funds (+$10.1 billion) and Institutional Money Market Funds (+$4.3 billion) peer groups.