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Monday Morning Memo: U.S. ETF Industry Review, February 2025 February 2025 was another month with strong inflows for the U.S. ETF industry. These inflows occurred in a volatile market environment in which ... Find Out More
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Loan Participation Funds Can Add Some Needed Diversification in a Rising Interest Rate Environment

Easy monetary policies implemented by the Federal Reserve Board to help grow the economy during the COVID-19 pandemic, coupled with calls for new government spending packages and supply chain disruptions, have exposed traditional bond funds to rising interest rates and inflation. This has prompted investors and their advocates to consider the benefits of Loan Participation Funds (aka floating rate loan funds, bank loan funds, and leveraged loan funds). Year to date through the Refinitiv Lipper fund-flows week ended October 13, 2021, investors have injected a net $36.7 billion into Loan Participation Funds (including ETFs)—the classification’s strongest inflows since 2013—attracting net
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Fund FlowsFund FlowsFund IndustryFund InsightLipper US Fund Flows
Oct 15, 2021
posted by Tom Roseen

Inflationary Concerns and a Broader Market Rally Drive This Month’s Flows to Date

Despite the Federal Reserve’s general stance that inflationary pressures will only be transitory, over the last few months signs that the economy is heating up have caused investors to take some of their hard-won profits off the table, pressuring the large-cap, growth-oriented, and stay-at-home stocks. Investors have been rotating out of the high-flying issues and picking up out-of-favor, value-oriented, interest-rate sensitive, and in some cases, international issues. While for the month of May through the Refinitiv Lipper fund-flows week ended May 19, mutual fund and ETF investors have injected $10.3 billion into equity funds (including ETFs), there have been some
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ETFsFund FlowsFund FlowsFund IndustryFund InsightLipper US Fund Flows
May 21, 2021
posted by Tom Roseen

Rising Yields Lead to Rising Interest in Lipper Loan Participation Funds

The Lipper Loan Participation Funds classification—including both conventional mutual funds and ETFs—has seen a massive influx of flows since the start of the year compared to its historical average. Total estimated net flows for March were $5.8 billion, representing the second largest March inflows to date. Q1 2021 estimated net inflows totaled $14.0 billion, equating to the classification’s third largest start to a calendar year of all time. Over the past two weeks, Lipper Loan Participation Funds have drawn in more than $2 billion alone and have been net positive in weekly flows for 14 straight weeks (check out the
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Chart of the DayChart of the WeekFixed IncomeFund FlowsFund FlowsFund Flows ChatFund PerformanceLipperLipper US Fund FlowsNew in Charts
Apr 16, 2021
posted by Jack Fischer

Conventional Fund Investors Still Favor Bond Funds During the Week

It wasn’t too surprising to see Lipper’s Inflation-Protected Bond Funds classification taking in net new money for the twenty-seventh consecutive week (+$58 million) and bank loan funds witnessing their twenty-sixth week of net inflows, attracting some $219 million for the week.
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Chart of the WeekFund FlowsFund IndustryFund InsightNews in Charts
May 12, 2017
posted by Tom Roseen

Investors Ring in the New Year by Padding the Coffers of Inflation-Protected Bond Funds and Loan Participation Funds

The Federal Open Market Committee released its December 2016 policy meeting minutes during the week. In the minutes Fed officials raised the likelihood they may have to raise interest rates faster than previously planned. Following the Fed’s two-day policy meeting in December, it raised its prime lending rate 25 basis points as expected and forecasted three more hikes in 2017, compared to the two that had been anticipated at its September meeting. In the minutes Fed officials raised concern that the labor market appears to be tightening more than expected, and some officials indicated that the risk to their economic
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Charts & TablesFund FlowsFund InsightNew in Charts
Jan 6, 2017
posted by Tom Roseen

Fund Investors Seek a Hedge Against Inflation Risk and Interest Rate Increases

Despite a 25-basis-point (bp) increase in the ten-year Treasury yield for the month to date, investors continued to prefer fixed income funds over their equity counterparts. For the fund-flows week ended October 26, 2016, mutual fund and exchange-traded fund (ETF) investors continued to pad the coffers of fixed income funds, injecting a net $776 million into the group and bringing the year-to-date net inflows for fixed income funds to $126.0 billion, their largest net inflows for any given year since 2012. As might be expected given the rise in Treasury yields at the long-end of the curve, investors shunned the
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Charts & TablesFund FlowsFund IndustryFund InsightFund Market
Oct 28, 2016
posted by Tom Roseen

Investors Embrace Bank Loan Funds

As inflation continued to run below the Federal Reserve Board’s long-term objective of 2%, many members of the Federal Open Market Committee opined at its September policy meeting that the near-term risks to the economic outlook appear to be roughly balanced, with economic activity improving and labor market conditions strengthening. These were some of the most hawkish comments in its policy statement the committee had used in quite some time, and investors appeared to be taking to heart the likelihood of an imminent rate increase. According to the CME Group’s FedWatch Tool, investors priced in a 65% chance the Fed
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Chart of the WeekFund FlowsFund IndustryFund Insight
Oct 14, 2016
posted by Tom Roseen

Bank-Loan Funds Gain Momentum Ahead of Fed Retreat

Investors were gearing up for interest rate hikes between January 2012 and March 2014, padding the coffers of loan participation funds (also known as bank-loan funds, senior-loan funds, or leveraged-loan funds). Loan participation funds invest in syndicated loans made to below-investment-grade companies and can provide attractive yields. However, the primary attractor of these funds is that they often provide floating rates that adjust at regular intervals (generally every month or quarter), reflecting changes in short-term interest rates (usually based on a common measure such as LIBOR). So, as interest rates rise, so do the yields on these issues. They can
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Chart of the WeekFund Flows
Aug 26, 2016
posted by Tom Roseen
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