Investors were overall net purchasers of fund assets (including those of conventional funds and ETFs) for the fourth week in a row. They injected $8.7 billion for Refinitiv Lipper’s fund-flows week ended December 2, 2020, as investors continued to cheer COVID-19 vaccine related news and learned of bipartisan support for a scaled back relief bill. Fund investors were net purchasers of long-term assets, injecting $7.2 billion into equity funds, $4.1 billion into taxable bond funds, and $201 million into municipal bond funds, while being net redeemers of money market funds, withdrawing $2.8 billion this week.
Market Wrap-Up
The U.S. market hit multiple record closing highs during the fund-flows week even after stocks posted their strongest November returns since 1928. The broad-based indices hit record closing highs on three of the four trading days—the markets were closed on Thursday in the U.S. in observation of Thanksgiving Day—during the flows week as investors embraced news of the possibility of Pfizer and BioNTech’s vaccine receiving official approval for use in the U.K. within a few days. Late in the fund-flows week, markets got a shot in the arm after lawmakers announced they were getting closer to an agreement on a scaled-back COVID-19 relief bill.
On the domestic side of the equation, “stay-at-home” and technology issues did a little bit better than some of the cyclical issues. The NASDAQ Composite Price Only Index (+2.11%) witnessed the strongest returns for the fund-flows week of the broadly followed U.S. indices, while the Russell 2000 Price Only Index (-0.38%) witnessed the only negative returns for the flows week. Overseas, the Shanghai Composite Price Only Index (+2.76%) chalked up the strongest plus-side returns of the often-followed broad-based global indices, while the FTSE 100 Price Only Index (+0.71%) posted the weakest returns.
The U.S markets were closed on Thursday, November 26, in observance of the Thanksgiving holiday. And while the markets closed early on Friday, November 27, the NASDAQ and S&P 500 booked record closing highs on Black Friday, historically one of the busiest shopping days of the year in the U.S., even as investors learned of new COVID-related business and consumer restrictions in the U.S. and other countries.
On Monday, November 30, the U.S. markets ended lower after chalking up their strongest monthly returns since 1987, with the Dow declining 271.73 points on the day as the potential of further fiscal stimulus talks were failing to yield results and after investors learned that October pending home sales fell for the second month in a row. Nonetheless, the 10-year Treasury yield closed up at 0.854% on the day and near month gold prices closed at a five-month low. However, the S&P 500 and the NASDAQ clinched new record highs on Tuesday, December 1, after a bipartisan group of lawmakers proposed a $900 billion coronavirus aid package and investors learned that retail sales on Cyber Monday were up 15.1% from last year, setting a record for the biggest online sales day in the U.S. On Wednesday, the S&P 500 and the NASDAQ closed at record highs after House Majority Leader, Representative Steny Hoyer, said congressional leaders hoped to reach an agreement on a scaled-back coronavirus relief bill over the weekend. Earlier in the day, markets got a boost after investors learned that the U.K. granted approval of the Pfizer/BioNTech vaccine for emergency use. The yield on the 10-year Treasury note rose to 0.951% on the day, extending the week’s selloff.
Exchange-Traded Equity Funds
Equity ETFs witnessed net inflows for the third week in a row—attracting $9.9 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$8.3 billion), injecting money also for the fifth consecutive week. However, nondomestic equity ETFs witnessed net inflows for the fourth week in a row, attracting $1.6 billion this past week. SPDR S&P 500 ETF (SPY, +$1.5 billion) and iShares Core S&P 500 ETF (IVV, +$1.1 billion) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, ProShares UltraPro QQQ ETF (TQQQ, -$552 million) experienced the largest individual net redemptions, and Invesco S&P High Beta ETF (SPHB, -$350 million) suffered the second largest net redemptions of the week.
Exchange-Traded Fixed Income Funds
For the first week in four, taxable fixed income ETFs witnessed net outflows, handing back $792 million this last week. APs were net purchasers of corporate investment-grade debt ETFs (+$513 million) and flexible ETFs (+$307 million) while being net redeemers of corporate high-yield ETFs (-$1.1 billion) and government-Treasury ETFs (-$300 million). iShares 20+ Year Treasury Bond ETF (TLT, +$637 million) and iShares Core US Aggregate Bond ETF (AGG, +$276 million) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, SPDR Bloomberg Barclays High Yield Bond ETF (JNK, -$721 million) and iShares 7-10 Year Treasury Bond ETF (IEF, -$609 million) handed back the largest individual net redemptions for the week. For the sixth week in a row, municipal bond ETFs witnessed net inflows, taking in $156 million this week.
Conventional Equity Funds
Conventional fund (ex-ETF) investors were net redeemers of equity funds for the thirty-second week in a row, withdrawing $2.7 billion this week, with the macro-group posting a 0.94% market gain for the fund-flows week. Domestic equity funds, suffering net redemptions of slightly more than $2.3 billion, witnessed their twenty-fifth consecutive weekly net outflows while posting a 0.80% gain on average for the fund-flows week. Nondomestic equity funds—posting a 1.27% return on average—experienced their fifteenth consecutive week of net outflows, handing back $417 million this past week. On the domestic equity side, fund investors continued to shun large-cap funds (-$1.5 billion) and small-cap funds (-$300 million). Investors on the nondomestic equity side were net redeemers of international equity funds (-$574 million) while padding the coffers of global equity funds (+$157 million).
Conventional Fixed Income Funds
For the fourth week in a row, taxable bond funds (ex-ETFs) witnessed net inflows—taking in $4.9 billion this past week—while posting a 0.32% return for the fund-flows week. Investors were net purchasers of corporate investment-grade debt funds (+$4.3 billion), flexible funds (+$430 million), and international & global debt funds (+$289 million), while being net redeemers of corporate high-yield funds (-$257 million). The municipal bond funds group posted a 0.38% return on average during the week and witnessed its fourth consecutive weekly net inflows, although attracting just $45 million this week.
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