by Pat Keon, CFA.
Lipper’s fund asset groups (including both mutual funds and exchange-traded funds) grew their coffers for the third straight week as they took in $15.7 billion in net new money for the fund-flows trading week ended Wednesday, September 18. All asset groups were on the plus side for the week, paced by equity funds (+$6.0 billion) and followed closely by money market funds (+$5.4 billion) and taxable bond funds (+$4.1 billion). Municipal bond funds extended their streak of consecutive net inflows to 37 weeks as the group had net positive flows of $209 million.
The equity markets were up slightly for the fund-flows trading week as the S&P 500 Index, NASDAQ Composite Index, and Dow Jones Industrial Average appreciated 0.19%, 0.09%, and 0.04%, respectively. The Federal Reserve cut rates another 25 basis points at the end of the week, but even this did not have much of a positive impact on the markets. The market’s reaction to the Fed news was most likely muted due to the interest rate cut being highly anticipated, as well as the Fed indicating that it does not have a preset course of action for interest rates. Fed Chair Jerome Powell stated that any future rate decreases will be “highly data dependent.”
ETFs (+$8.4 billion) had overall net inflows for the fourth straight week on the strength of the demand for equity ETFs (+$8.8 billion), while taxable bond ETFs (-$314 million) and municipal bond ETFs (-$98 million) both saw money leave. The largest individual net inflows for equity ETFs belonged to iShares Russell 2000 ETF (IWM, +$2.8 billion) and iShares Core S&P 500 ETF (IVV, +$2.4 billion). The most significant net outflows among taxable bond ETFs were attributable to iShares 7-10 Year Treasury Bond ETF (IEF, -$1.7 billion) and SPDR Bloomberg Barclays Intermediate Term Treasury ETF (JNK, -$950 million).
Equity Mutual Funds
Equity mutual funds (-$2.8 billion) had net money leave for the thirty-first straight week. Both domestic equity funds (-$1.8 billion) and nondomestic equity funds (-$1.1 billion) had a hand in this week’s net outflows. The largest net outflows among the regional equity peer groups belonged to International Large-Cap Core Funds (-$1.2 billion) and Large-Cap Growth Funds (-$429 million).
Fixed Income Mutual Funds
Municipal debt funds (+$307 million) grew their run of weekly net inflows to 37, while taxable bond funds (+$4.1 billion) extended their streak to seven weeks. The High Yield Funds (+$1.1 billion) and Core Bond Funds (+$634 million) peer groups led the net positive flows for taxable bond funds, while General Muni Debt Funds (+$277 million) and Short Muni Debt Funds (+$137 million) paced the tax-exempt peer groups.
Money Market Mutual Funds
Money market funds had net positive flows of $5.4 billion for the week, led by the U.S. Government Money Market Funds (+$5.6 billion) and Money Market Instrument Funds (+$3.0 billion) peer groups. Institutional U.S. Treasury Money Market Funds (+$2.4 billion) experienced the most significant net outflow within the asset group.