August 27, 2020

Refinitiv Lipper U.S. Weekly FundFlows Insight Report: Funds Suffer Net Outflows for the Third Consecutive Week

by Pat Keon, CFA.

Refinitiv Lipper’s fund asset groups (including both mutual funds and ETFs) had net outflows of $2.6 billion for the fund-flows trading week ended Wednesday, August 26. Equity Funds (-$7.8 billion) and money market funds (-$4.6 billion) were responsible for all of the net negative flows while taxable bond funds and municipal bond funds took in net new money of $8.7 billion and $1.0 billion, respectively. Taxable and muni bond funds ran their net inflow streaks to twenty weeks and sixteen weeks, respectively.

Market Overview

The equity indices all posted gains for the fund-flows trading week. The technology heavy NASDAQ Composite Index appreciated 4.7% to lead the way while the S&P 500 Index and Dow Jones Industrial Average recorded gains of 3.1% and 2.3%, respectively.

The NASDAQ is up 30.1% for the year to date despite its first quarter (-14.2%) COVID-19 induced slump. The NASDAQ’s bounce during the second and thirds quarters has also been spurred by investor reaction to the coronavirus. Investors have sought out large-cap tech stocks as a safe haven while they wait out the uneven economic recovery.

Market news was mixed this week as could be expected in these bumpy economic times. On the negative side, first time unemployment claims inched upwards (to 1.1 billion from 976 million) as the labor market’s uneven recovery continues and U.S. consumer confidence cratered to a 6-year low. The consumer confidence index fell to 84.8 this month from 91.7 in July. On the plus side of the ledger, the U.S/China trade deal appears to have been resuscitated, U.S. home sales increased at a record rate for the second straight month, and the purchasing managers’ indexes for both the manufacturing and service sectors grew at a higher than anticipated rate.

ETFs

ETFs took in $2.3 billion of net new money. Taxable bond ETFs (+$2.8 billion) were responsible for all of the net inflows while equity ETFs (-$527 million) and tax-exempt ETFs (-$20 million) both saw money leave. The largest individual net inflows for taxable bond ETFs belonged to two below investment-grade products as iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and Xtrackers USD High Yield Corporate Bond ETF (HYLB) grew their coffers by $797 million and $316 million, respectively. The largest net negative flows for equity ETFs were attributable to SPDR S&P 500 ETF (SPY, -$1.5 billion) and Invesco S&P 500 Low Volatility ETF (SPLV, -$459 million).

Equity Mutual Funds

Equity mutual funds (-$7.2 billion) suffered net outflows for the eighteenth consecutive week. Domestic equity funds (-$6.2 billion) were responsible for the majority of the net outflows while nondomestic equity funds accounted for $1.0 billion of the total net negative flows. At the peer group level, the largest net outflows belonged to Large-Cap Growth Funds (-$1.2 billion) and International Multi-Cap Core Funds (-$476 million) among the domestic and nondomestic fund universes, respectively.

Fixed Income Mutual Funds

The taxable bond (+$5.9 billion) and tax-exempt bond (+$1.0 billion) fund groups both continued their long runs of consecutive net inflows. The largest net positive flows for taxable bond funds belonged to the Core Plus Bond Funds (+$1.3 billion) and Core Bond Funds (+$1.0 billion) peer groups while for tax-exempt bond funds, Short Muni Debt Funds (+$518 million) led the way.

Money Market Mutual Funds

Money market funds experienced net outflows (-$4.6 billion) for the fifth straight week. The net negative flows were driven by Institutional U.S. Government Money Market Funds (-$15.1 billion) while the largest net inflow among the peer groups belonged to Institutional U.S. Treasury Money Market Funds (+$5.5 billion).

 

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