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May 30, 2024

U.S. Weekly FundFlows Insight Report: Fund Market Reports First Outflow in Six Weeks

by Jack Fischer.

The data in the article below is sourced from Lipper’s Global Fund Flows application. GFF can be found on LSEG Workspace (“FundFlows”).

During LSEG Lipper’s fund-flows week that ended May 29, 2024, investors were overall net sellers of fund assets (including both conventional funds and ETFs) for the first week in six, removing a net $9.6 billion.

This past week, equity funds (-$6.9 billion), money market funds (-$2.4 billion), commodities funds (-$584 million), taxable bond funds (-$318 million), mixed-assets funds (-$175 million), and tax-exempt bond funds (-$95 million) suffered outflows.

Alternative investments funds (+$852 million) was the only group to post inflows.

Both passive and active equity funds reported outflows (-$3.5 billion and -$3.4 billion, respectively). Actively managed equity funds have seen 10 straight weeks of outflows, while passive equity funds realized their first outflow in six weeks.

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Actively managed fixed income funds (+$439 million) saw their twentieth weekly inflow over the past 22 weeks. Passive fixed income funds (-$1.4 billion) reported their first outflow in four weeks.

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In aggregate, spot bitcoin ETFs saw an inflow (+$555 million) over the week as iShares Bitcoin Trust (IBIT) surpassed Grayscale Bitcoin Trust (GBTC) in assets under management for the first time, becoming the largest ETF offering exposure to spot bitcoin.

Index Performance

At the close of LSEG Lipper’s fund-flows week, U.S. broad-based equity indices reported mixed returns for the second straight week—the Nasdaq (+0.71%) saw gains, while the DJIA (-3.10%), Russell 2000 (-2.19%), and S&P 500 (-0.75%) were all in the red.

The FTSE U.S. Broad Investment Grade Bond Total Return Index (-1.00%), High Yield Market Total Return Index (-0.51%), and Municipal Tax-Exempt Investment Grade Bond Index (-0.81%) all fell for the second consecutive week.

Overseas broad-based indices also posted negative returns—the DAX Total Return (-1.29%), FTSE 100 (-2.32%), Nikkei 225 (-0.77%), S&P/TSX Composite (-2.27%), and Shanghai Composite (-1.63%) all depreciated.

Rates/Yields

Both the two- (+2.09%) and 10-year (+4.25%) Treasury yield rose over the course of the week. Since the start of the year, both yields have risen (+17.06% and +19.35%, respectively).

According to Freddie Mac, the 30-year fixed-rate average (FRM) increase for the first week in four, with the weekly average currently at 7.03%. The United States Dollar Index (DXY, -0.30%) decreased, while the VIX (+13.94%) jumped over the course of the week.

The CME FedWatch Tool has the likelihood of the Federal Reserve leaving interest rates unchanged at 98.9%. This tool forecasted a 9.6% possibility of a 25-bps cut one month ago. The next meeting is scheduled for June 12, 2024.

Exchange-Traded Equity Funds

Exchange-traded equity funds recorded a $2.1 billion weekly outflow, the first outflow in six weeks. The macro-group posted a 1.26% gain on the week, the second consecutive negative return.

Sector equity ETFs (-$1.4 billion), small-cap ETFs (-$769 million), and world sector equity ETFs (-$701 million) suffered the largest weekly outflows under equity ETFs. Financial Services ETFs (-$781 million) and Consumer Services ETFs (-$378 million) were the laggards in under sector equity. Sector equity ETFs have bled capital in four of the past five weeks.

Emerging markets equity ETFs (+$595 million), equity income ETFs (+$530 million), and large-cap ETFs (+$115 million) were the top equity ETF groups to log inflows. Emerging markets equity ETFs have now witnessed five straight weeks of net new money and are celebrating inflows in 16 of the last 18 weeks.

Over the past fund-flows week, the two top equity ETF flow attractors were Invesco QQQ Trust Series 1 (QQQ, +$2.3 billion) and Invesco NASDAQ 100 ETF (QQQM, +$1.0 billion).

Meanwhile, the two bottom equity ETFs in terms of weekly outflows were SPDR S&P 500 ETF Trust (SPY, -$4.2 billion) and iShares Russell 2000 ETF (IWM, -$846 million).

Exchange-Traded Fixed Income Funds

Exchange-traded taxable fixed income funds observed a $480 million weekly inflow—the macro group’s fourth consecutive week seeing an inflow. Fixed income ETFs reported a loss of 0.90% on average, marking the first time posting a loss in four weeks.

Short/intermediate investment-grade ETFs (+$779 million), alternative bond ETFs (+566 million), and government & Treasury ETFs (+$186 million) were the top subgroups under taxable bond ETFs to observe inflows. Short/intermediate investment-grade ETFs have attracted inflows in 13 of the last 15 weeks.

General domestic taxable fixed income ETFs (-$703 million), high yield ETFs (-$358 million), and emerging markets debt funds (-$27 million) were the top taxable fixed income ETF to suffer outflows. The largest attributor under general domestic fixed incomes ETFs was the Corporate  Debt BBB-Rated Lipper classification (-$1.1 billion).

Municipal bond ETFs reported a $34 million outflow over the week, marking the second consecutive weekly outflow. Municipal bond ETFs saw their eighth weekly loss (-0.62%) in 11 weeks.

iShares 0-3 Month Treasury Bond ETF (SGOV, +$221 million) and iShares Broad USD High Yield Corporate Bond ETF (USHY, +$152 million) attracted the largest amounts of weekly net new money under fixed income ETFs.

On the other hand, iShares iBoxx Investment Grade Corporate Bond ETF (LQD, -$1.3 billion) and SPDR Bloomberg High Yield Bond ETF (JNK, -$357 million) suffered the largest weekly outflows.

Conventional Equity Funds

Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$4.7 billion) for the one-hundred-and-twentieth straight week. Conventional equity funds posted a weekly return of negative 1.33%, the second week of losses in three.

Multi-cap funds (-$1.5 billion), large-cap funds (-$757 million), and small-cap funds (-$580 million) were the top conventional equity fund subgroups to realize weekly outflows. Multi-cap conventional mutual funds logged their thirty-ninth outflow over the past 40 weeks, led by Multi-Cap Value Funds (-$602 million).

No subgroup under conventional equity mutual funds saw an inflow over the trailing week.

Conventional Fixed Income Funds

Conventional taxable-fixed income funds realized a weekly outflow of $794 million—marking the fifth consecutive outflow and eighth in the last 10 weeks. The macro-group realized a loss of 0.68% on average—their second straight week reporting negative performance.

Short/intermediate investment-grade funds (-$406 million), government & Treasury funds (-$115 million), and alternative bond funds (-$88 million) led taxable fixed income mutual fund subgroups in weekly net outflows. Short/intermediate investment-grade funds have seen four consecutive weeks of outflows.

No subgroup under taxable fixed income mutual funds observed a weekly inflow.

Municipal bond conventional funds (ex-ETFs) returned a negative 0.69% over the fund-flows week, giving the subgroup its eighth loss in 11 weeks. Tax-exempt fixed income mutual funds experienced a $55 million outflow, marking the third straight week of outflows.

*Lipper weekly fund flows period is from the prior Thursday through Wednesday.

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