Lipper U.S. Weekly FundFlows Insight Report: Money Market Funds Again Drive Overall Net Outflows

Lipper’s fund asset groups (including both mutual funds and ETFs) saw $8.8 billion net leave their coffers for the fund-flows week ended Wednesday, October 3. Money market funds (-$10.1 billion) led the net outflows, bettered by taxable bond funds (-$235 million) and municipal debt funds (-$44 million). Equity funds (+$1.5 billion) were the only asset group taking in net new money.

Market Overview

The Dow Jones Industrial Average and the S&P 500 Index appreciated 1.68% and 0.67%, respectively, for the fund-flows week. Trade worries eased and the markets rallied when the North American Free Trade Agreement was repackaged as a trilateral agreement between the U.S., Canada, and Mexico on Monday, October 1. The new pact will be called the United States-Mexico-Canada Agreement, with the purpose of bringing more jobs to the U.S., while Canada and Mexico will accept more restrictive commerce. Canada took advantage of the compromise by immediately attempting to lobby the U.S. to remove its steel and aluminum tariffs. The Dow Jones Industrial Average responded to the trade announcement by closing out the fund-flows trading week with its thirteenth, fourteenth, and fifteenth record-high closes for the year.

ETFs

ETFs experienced net-positive flows (+$6.2 billion) for the fourth consecutive week. Equity ETFs (+$5.3 billion) accounted for the lion’s share of this increase, while taxable bond ETFs and muni bond ETFs contributed $807 million and $116 million, respectively, to the total net intake. SPDR S&P 500 ETF (SPY, +$1.8 billion) and iShares Russell 2000 ETF (IWM, +$879 million) posted the largest individual net inflows for equity ETFs, while iShares iBoxx $ High Yield Corporate Bond ETF (HYG, +$1.3 billion) had the largest on the taxable bond side of the ledger.

Equity Mutual Funds

Equity mutual funds (-$3.8 billion) suffered net outflows for the fifteenth straight week. Both domestic equity funds (-$2.2 billion) and nondomestic equity funds (-$1.7 billion) saw net money leave for the week. The largest net outflows among domestic equity funds belonged to the Small-Cap Core Funds peer group (-$617 million), while International Large-Cap Growth Funds (-$622 million) had the largest net outflows for nondomestic equity funds.

Fixed Income Mutual Funds

Both the taxable bond (-$1.0 billion) and muni debt (-$160 million) mutual fund groups suffered net outflows for the week. U.S. Mortgage Funds (-$227 million) and Intermediate Muni Debt Funds (-$147 million) had the highest net outflows for the fixed income asset group.

Money Market Mutual Funds

Money market funds experienced net outflows of $10.1 billion, thanks to the Institutional U.S. Government Money Market Funds peer group (-$10.8 billion) and Institutional Money Market Funds (-$4.9 billion) peer groups.