August 29, 2019

Lipper U.S. Weekly FundFlows Insight Report: Funds Suffer Net Outflows Driven by Money Market Funds

by Pat Keon, CFA.

Lipper’s fund asset groups (including both mutual funds and exchange-traded funds) had net outflows of $17.0 billion for the fund-flows trading week ended Wednesday, August 28. The negative net flows were paced by money market funds (-$16.2 billion) and equity funds (-$7.3 billion) while taxable bond funds and municipal bonds funds took in $5.0 billion and $1.5 billion in net new money, respectively.

Market Overview

The NASDAQ Composite Index, S&P 500 Index, and Dow Jones Industrial Average all lost ground during the fund-flows trading week as the indices continued to be weighed down by the trade war between the U.S. and China. Each index lost about 3.0% on Friday, August 23 when China announced new tariffs on U.S. goods and President Trump responded by advising U.S. companies to stop doing business in and with China. Cooler heads prevailed on Monday as each side extended olive branches and stated that they thought a trade deal was possible. The markets reacted in kind with each index posting gains of greater than 1.0% for the day. Overall for the week, the NASDAQ, S&P 500, and the Dow finished down 2.0%, 1.3%, and 0.6%, respectively. Each index is also down for the quarter to date with the Dow taking the hardest hit (-2.1%) followed by the NASDAQ (-1.9%) and the S&P 500 (-1.8%).

ETFs

ETFs had overall positive net flows of $2.4 billion which were attributable to the taxable bond (+$4.4 billion) and muni bond (+$291 million) asset groups. Among the fixed income ETF universe the largest individual net inflows belonged to the Schwab U.S. TIPS ETF (SCHP, +$969 million), iShares U.S. Treasury Bond ETF (GOVT, +$680 million), and iShares National Municipal Bond ETF (MUB, +$172 million). Conversely, equity ETFs (-$2.3 billion) saw money leave their coffers with the Industrial Select Sector SPDR ETF (XLI, -$823 million) and iShares Core S&P 500 ETF (IVV, -$810 million) suffering the largest net outflows.

Equity Mutual Funds

Equity mutual funds (-$5.0 billion) experienced net outflows for the twenty-eighth straight week. Both domestic equity funds (-$3.1 billion) and nondomestic equity funds (-$1.9 billion) contributed to this week’s net negative flows. The largest net outflows among the equity peer groups belonged to Emerging Markets Funds (-$487 million) and Large-Cap Core Funds (-$416 million).

Fixed Income Mutual Funds

Municipal debt funds (+$1.2 billion) extended their streak of consecutive net inflows to thirty-four, while taxable bond funds (+$585 million) took in net new money for the tenth week in eleven. The General Muni Debt Funds (+$415 million) and High Yield Muni Debt Funds (+$398 million) peer groups paced the net inflows on the tax-exempt funds’ side of the ledger while Core Plus Bond Funds (+$1.0 billion) and Core Bond Funds (+$509 million) led the taxable bond funds.

Money Market Mutual Funds

Money market funds saw money leave (-$16.2 billion) for the first week in four. The net outflows were driven by funds in the Institutional U.S. Treasury Money Market Funds (-$7.1 billion) and Institutional U.S. Government Money Market Funds (-$6.5 billion) peer groups. Money Market Instrument Funds (+$2.5 billion) recorded the largest net inflow for the asset group.

 

 

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