by Pat Keon, CFA.
Lipper’s fund asset groups (including both mutual funds and exchange-traded funds) took in approximately $19.6 billion of net new money for the fund-flows trading week ended December 31. This result represents the fifth overall net inflow in the last six weeks for funds. Money market funds paced this week’s net inflows (+$21.3 billion), while municipal bond funds contributed $281 million to the overall net positive flows. Equity funds (-$1.3 billion) and taxable bonds funds (-$699 million) both had net negative flows for the week.
All of the major equity indices posted gains for the fourth consecutive fund-flows trading week. The S&P 500 Index, NASDAQ Composite Index, and the Dow Jones Industrial Average rose 0.23%, 0.22%, and 0.08%, respectively, in a holiday-shortened trading week. Contrary to last year, when each index suffered a double-digit loss in Q4, all of the indices posted solid quarterly gains this year. The NASDAQ, S&P 500, and the Dow finished up 12.17%, 8.53%, and 6.02%, respectively, for the fourth quarter of 2019, which drove their respective increases for the year to 35.23%, 28.88%, and 22.34%. For the NASDAQ and the S&P 500, this year’s performance marked the best results since 2013 when the NASDAQ gained 38.32% and the S&P 500 appreciated 29.60%, while for the Dow this year was its best performance since 2015 (+25.08%).
ETFs had net positive flows of $4.6 billion as all three fund asset groups took in net new money. The week’s net inflows for ETFs were paced by taxable bond ETFs (+$2.3 billion) and equity ETFs (+$2.1 billion), while muni bond ETFs chipped in $136 million. On the taxable bond side of the ledger, the largest individual net inflows belonged to iShares Core U.S. Aggregate Bond ETF (AGG, +$304 million) and iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB, +$216 million). For equity ETFs, the lion’s share of the net positive flows was attributable to SPDR S&P 500 ETF (SPY, +$3.0 billion).
Equity Mutual Funds
Equity mutual funds suffered net outflows of $3.4 billion for the fund-flows trading week. The majority of this week’s net negative flows came from domestic equity funds (-$2.6 billion), while nondomestic equity funds had net outflows of $729 million. Among the peer groups, Large-Cap Value Funds (-$394 million) and International Multi-Cap Growth Funds (-$263 million) had the largest net outflows in the domestic and nondomestic equity fund universes.
Fixed Income Mutual Funds
Municipal debt funds (+$144 million) took in net new money for the fifty-second straight week, while taxable bond funds had $3.0 billion leave their coffers. The largest net inflows among the tax-exempt peer groups belonged to Intermediate Muni Debt Funds (+$131 million) and General Muni Debt Funds (+$47 million), while Loan Participation Funds (-$579 million) and Ultra Short Obligation Funds (-$481 million) had the largest net outflows among the taxable bond fund peer groups.
Money Market Mutual Funds
Money market funds paced the net inflows (+$21.3 billion) among the fund asset groups for the week. The Institutional U.S. Government Money Market Funds (+$18.9 billion) peer group was responsible for the lion’s share of the week’s net positive flows, while the Institutional Money Market Funds peer group saw $4.0 billion leave.