by Tom Roseen.
Investors were overall net purchasers of fund assets (including those of conventional funds and ETFs) for the seventh consecutive week. They injected $74.7 billion for Refinitiv Lipper’s fund-flows week ended March 24, 2021 (their largest weekly sum since April 29, 2020), with the lion’s share attributable to flows into short-term assets. Fund investors padded the coffers of money market funds (+$59.3 billion), equity funds (+$10.9 billion), taxable bond funds (+$3.9 billion), and tax-exempt fixed income funds (+$592 million) for the week.
The broad-based U.S. indices, from a performance perspective, took it on the chin for fund-flows week as investors appeared to unwind some of their recent rotation wins, several European countries witnessed a third round of COVID-19 lockdowns, and the Federal Reserve said it would not extend the temporary capital-requirement relief rules for banks.
On the domestic side of the equation, the Russell 2000 Price Only Index (-8.65%) suffered the largest market losses of the other broadly followed U.S. indices for the fund-flows week, bettered by the NASDAQ Composite Price Only Index (-4.16%). The Dow Jones Industrial Average Price Only Index (-1.80%) did the best job mitigating losses for week. Overseas, the Xetra DAX Total Return Index (-0.53%) posted the strongest relative returns of the other often-followed broad-based global indices, while the Nikkei 225 Price Only Index (-4.69%) witnessed the largest declines.
On Thursday, March 18, 2021, stocks finished markedly lower, with the NASDAQ declining 3% on the day as the 10-year Treasury yield rose eight basis points (bps) to 1.71% and European countries contended with a third round of COVID-19 shutdowns. This weighed on near-month crude oil futures, with the U.S. benchmark declining 7% to $60 per barrel (bbl) and gold edging higher. U.S. stocks suffered another round of declines on Friday, March 19, after investors learned the Fed will not extend temporary relief from year-long bank capital-requirement rules—pressuring financial issues—and the 10-year Treasury yield rose an additional three bps to 1.74%. Oil gained back some of the losses from the day before, settling at $61.42/bbl.
Stocks snapped their two-day losing streak on Monday, March 22, after the 10-year Treasury yield witnessed a minor pullback from recent highs, settling at 1.69%. Nonetheless, on Tuesday, March 23, the Dow fell 300 points on the day as investors evaluated Europe’s slow vaccine rollout and rising coronavirus case count and considered the impact those might have on the global economy this summer. The recently popular cyclical and energy issues led the decline, with the Russell 2000 witnessing the sharpest loss for the day. On Wednesday, March 24, the Dow gave up early gains, just closing in negative territory. Investors weighed news of an increase in eurozone activity against news that February durable goods orders suffered their first decline in 10 months.
Exchange-Traded Equity Funds
Equity ETFs witnessed their seventh consecutive week of net inflows—attracting $14.3 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$12.3 billion), injecting money for the third week in a row. Nondomestic equity ETFs witnessed net inflows for the fourteenth week running, attracting $2.0 billion this past week. SPDR S&P 500 ETF (SPY, +$9.0 billion, last week’s laggard) and Invesco QQQ Trust 1 ETF (QQQ, +$4.9 billion) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, iShares Russell 2000 ETF (IWM, -$1.4 billion) experienced the largest individual net redemptions, and Invesco S&P 500 Equal Weight ETF (RSP, -$642 million) suffered the second largest net redemptions of the week.
Exchange-Traded Fixed Income Funds
For the second week in three, taxable fixed income ETFs witnessed net outflows, however, only handing back $232 million this last week. APs were net purchasers of government-Treasury ETFs (+$567 million) and international & global debt ETFs (+$498 billion) while being net redeemers of corporate high-yield ETFs (-$729 million) and corporate investment-grade debt ETFs (-$478 million). iShares JPMorgan USD Emerging Markets Bond ETF (EMB, +$448 million) and iShares Core Total USD Bond Market ETF (IUSB, +$445 million) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD, -$2.0 billion) and iShares iBoxx $ High Yield Corporate Bond ETF (HYG, -$1.3 billion) handed back the largest individual net redemptions for the week. For the fourth week in a row, municipal bond ETFs witnessed net inflows, taking in $226 million.
Conventional Equity Funds
Conventional fund (ex-ETF) investors were net redeemers of equity funds for the first week in three, withdrawing $3.4 billion this week, with the macro-group posting a 3.31% market loss for the fund-flows week. Domestic equity funds, suffering net redemptions of slightly less than $4.9 billion, witnessed their thirteenth weekly net outflows while experiencing a 3.38% decline on average for the fund-flows week. Nondomestic equity funds—posting a 3.15% weekly loss on average—observed their seventh consecutive week of net inflows, taking in $1.4 billion this past week. On the domestic equity side, fund investors shunned large-cap funds (-$3.0 billion). Investors on the nondomestic equity side were net purchasers of international equity funds (+$639 million) and global equity funds (+$802 million).
Conventional Fixed Income Funds
For the fourteenth week in a row, taxable bond funds (ex-ETFs) witnessed net inflows—taking in $4.2 billion this past week—while posting a 0.31% loss for the fund-flows week. Investors were net purchasers of corporate investment-grade debt funds (+$3.7 billion), flexible funds (+$1.2 billion), and government-Treasury funds (+$452 million) while being net redeemers of corporate high-yield funds (-$650 billion) and government-mortgage funds (-$508 million). The municipal bond funds group posted a 0.13% loss on average during the week and witnessed its third straight week of net inflows, but attracted just $367 million this week. High Yield Municipal Debt Funds (+$250 million) experienced the largest net inflows of the group, followed closely by General & Insured Municipal Debt Funds (+$214 million).