U.S. Weekly FundFlows Insight Report: ETF & Fund Investors Inject $22.7 Billion for the Week as the Dow Hits Record High, Closing Above 33,000

Investors were overall net purchasers of fund assets (including those of conventional funds and ETFs) for the sixth consecutive week. They injected $22.7 billion for Refinitiv Lipper’s fund-flows week ended March 17, 2021. Fund investors padded the coffers of equity funds (+$18.3 billion), taxable bond funds (+$8.2 billion), and tax-exempt fixed income funds (+$1.3 billion), while being net redeemers of money market funds (-$5.0 billion) for the week.

Market Wrap-Up

The broad-based U.S. indices ended the fund-flows week in the black after President Joe Biden signs the $1.9 trillion relief package into law, the Federal Reserve Board keeps its easy-money stance in play, and COVID-19 vaccine distribution improves.

On the domestic side of the equation, the NASDAQ Composite Price Only Index (+3.49%) posted the strongest returns of the other broadly followed U.S. indices for the fund-flows week, followed by the Dow Jones Industrial Average Price Only Index (+2.22%)—closing the week out at a record high—above the 33,000 mark for the first time. The S&P 500 Price Only Index (+1.93%) was the relative laggard. Overseas, the Shanghai Composite Price Only Index (+2.76%) posted the strongest returns of the other often-followed broad-based global indices, while the FTSE 100 Price Only Index (+0.42%) was the group straggler.

On Thursday, March 11, 2021, the Dow finished in record territory after President Biden signed the $1.9 trillion financial aid bill into law and U.S. Treasury yields stabilized. The 10-year Treasury yield closed the day out at 1.54%. The continued equity rally was supported by data that showed new jobless claims from the week prior declined by 42,000 to 712,000, the lowest level since November. Oil futures rose 2.5% to close at $66.02 per barrel on the day. U.S. stocks rallied to new highs on Friday, March 12, after investors continued to rotate out of stay-at-home stocks and into cyclical stocks that will benefit from strengthening economic recovery later this year. The 10-year Treasury yield resumed its ascent, finishing the day up 10 basis points (bps) at 1.64%, despite the producer price index rising 0.5%, in line with analyst expectations.

Ahead of the Federal Open Market Committee meeting set to start on Tuesday, the S&P 500, the Russell 2000, and the Dow closed at record highs as value stocks continued their comeback on Monday, March 15, 2021. The 10-year Treasury yield declined two bps to 1.62%, while near-month gold futures closed at a near two-week high of $1,729.20 an ounce. Nonetheless, on Tuesday, March 16, the Dow snapped it’s four-day record-breaking winning streak as investors hit the pause button ahead of the FOMC meeting. Despite investors learning that about 32% of the U.S. population have received at least one vaccine dose according to the CDC, news that February U.S. retail sales and industrial production declined cast a slight pall over the markets, with just the NASDAQ eking out modest gains. On Wednesday, March 10, the Dow closed at a new record high, rising above the 33,000 mark for the first time in history (its fastest 1,000-point gain—in just five days—on record) after the Federal Reserve said it would hold interest rates near zero through 2023 and kept its monthly asset purchases unchanged. The Fed also raised its GDP forecast to 6.5% from its prior forecast of 4.2%, influenced by the recently passed $1.9 trillion stimulus package.

Exchange-Traded Equity Funds

Equity ETFs witnessed their sixth consecutive week of net inflows—attracting $16.2 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$14.1 billion), injecting money, for the second week in a row. Nondomestic equity ETFs witnessed net inflows for the thirteenth week running, attracting $2.1 billion this past week. Invesco QQQ Trust 1 ETF (QQQ, +$2.3 billion, last week’s laggard) and Invesco PureBeta MSCI USA ETF (PBUS, +$1.7 billion) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, SPDR S&P 500 ETF (SPY, -$3.9 billion) experienced the largest individual net redemptions, and SPDR Gold ETF (GLD, -$665 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 inflows, taking in $3.1 billion this last week. APs were net purchasers of corporate high-yield ETFs (+$1.8 billion) and corporate investment-grade ETFs (+$1.3 billion) while being net redeemers of government-Treasury ETFs (-$437 million). iShares iBoxx $ High Yield Corporate Bond ETF (HYG, +$1.8 billion, last week’s laggard) and iShares Core U.S. Aggregate Bond ETF (AGG, +$408 million) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, iShares 7-10 Year Treasury Bond ETF (IEF, -$330 million) and iShares Short Treasury Bond ETF (SHV, -$306 million) handed back the largest individual net redemptions for the week. For the third week in a row, municipal bond ETFs witnessed net inflows, taking in $213 million.

Conventional Equity Funds

Conventional fund (ex-ETF) investors were net purchasers of equity funds for the second week in a row, injecting $2.1 billion this week, with the macro-group posting a 2.17% market gain for the fund-flows week. Domestic equity funds, suffering net redemptions of slightly less than $622 million, witnessed their twelfth weekly net outflows while experiencing a 2.29% gain on average for the fund-flows week. Nondomestic equity funds—posting a 1.89% weekly gain on average—witnessed their sixth consecutive week of net inflows, taking in $2.7 billion this past week. On the domestic equity side, fund investors shunned large-cap funds (-$2.5 billion) but directed money toward mid-cap funds (+$820 million) and small-cap funds (+$553 million). Investors on the nondomestic equity side were net purchasers of international equity funds (+$2.1 billion) and global equity funds (+$591 million).

Conventional Fixed Income Funds

For the thirteenth week in a row, taxable bond funds (ex-ETFs) witnessed net inflows—taking in $5.0 billion this past week—while posting a 0.14% return for the fund-flows week. Investors were net purchasers of corporate investment-grade debt funds (+$4.1 billion), flexible funds (+$1.4 billion), and government-Treasury funds (+$650 million) while being net redeemers of corporate high-yield funds (-$1.4 billion) and balanced funds (-$167 million). The municipal bond funds group posted a 0.01% loss on average during the week and witnessed its second straight week of net inflows, attracting $1.1 billion this week. High Yield Municipal Debt Funds (+$592 million) experienced the largest net inflows of the group, followed closely by General & Insured Municipal Debt Funds (+$462 million).