Lipper Fund Flows: Taxable Bond Funds Are Tops With $1.7 Billion Boost

Performance of the U.S. broad equity market indices was essentially flat for the fund-flows week ended Wednesday, April 29. The S&P 500 Index was off 0.05% (-1.11 points), while the Dow Jones Industrial Average lost 0.01% (-2.74 points).

While the markets’ performance was relatively static during the week, the Federal Reserve kept things interesting with its statement following its two-day policy meeting. Released on Wednesday afternoon, this statement left open the possibility of a Fed interest rate hike as early as June despite recent weak economic data. The most alarming part of this economic news was that the economy grew at a subpar rate of 0.2% for the first quarter. The Fed brushed off the economic slowdown, stating it thought the less-than-stellar first quarter results were due to “transitory factors” such as the extended winter much of the country faced, the strong dollar, and falling oil prices. The Fed reiterated that overall it expects the economy to grow at a moderate pace for the year.

Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) had aggregate net outflows of $5.1 billion for the week. However, three of the four macro-groups experienced positive net flows. Taxable bond funds (+$1.7 billion) turned in the largest positive number among the three, followed by equity funds (+$689 million) and municipal bond funds (+$481 million), but large net outflows from money market funds (-$8.0 billion) put overall flows in the red for the week.

All of the net inflows into taxable bond funds came from mutual funds (+$1.8 billion), while ETFs saw net outflows of $61 million. For mutual funds, Core Plus Bond Funds (+$1.4 billion) and Core Bond Funds (+$1.3 billion) paced the net inflows for the second consecutive week. iShares iBoxx $ High Yield Corporate Bond ETF (HYG, -$501 million) and SPDR Barclays High Yield Bond ETF (JNK, -$218 million) had the largest net outflows on the ETFs side.

ETFs (+$2.3 billion) accounted for all of the net inflows for equity funds, while mutual funds had $1.6 billion of net outflows. For the ETFs Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF, +$612 million) and PowerShares QQQ (QQQ, +$580 million) experienced the largest gains of net new money. On the mutual fund side, domestic equity funds (-$3.3 billion) were responsible for all of the net outflows, while nondomestic equity funds grew their coffers by $1.7 billion.

Municipal bond mutual funds took in $401 million of net new money for the week. Funds in the national municipal debt categories contributed $327 million to this total, while single-state muni funds chipped in $74 million.

Money market funds had their fifth consecutive week of net outflows (-$8.0 billion this past week). Within the money market group, funds in the Institutional Money Market Funds (-$11.7 billion) and Money Market Funds (-$3.6 billion) classifications experienced the two biggest net outflows.

For more information on this week’s Lipper fund flows data, please refer to Lipper’s U.S. Fund Flows website or this video.

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