U.S. Fund Flows: Investors Pull $7.4 Billion From U.S. Funds

Includes: DIA, QQQ, SPY
by: Lipper Alpha Insight

By Patrick Keon

Thomson Reuters Lipper's fund macro groups (including both mutual funds and exchange traded funds [ETFs]) suffered negative net flows of over $7.4 billion for the fund flows week ended Wednesday, April 13. The key contributors to the week's outflows were money market funds (-$5.1 billion) and equity funds (-$4.8 billion), while taxable bond funds and municipal bond funds were able to record positive flows of $2.0 billion and $464 million, respectively.

Equities continued their march forward during the week as the S&P 500 Index recorded a return of 0.8%. This performance marked the index's ninth straight week of gains, during which time it appreciated 12.5%.

The S&P 500 captured all of its gains during the last two trading sessions of the week on the strength of financial and energy stocks. Financial stocks rallied on better-than-expected earnings from JPMorgan Chase & Co. (NYSE:JPM). Not only did its news lift the stock price of JPMorgan, but it also spurred the financial sector of the S&P 500 to a one-day return of 2.3%, the largest return among all the index's sectors. Energy stocks took strength from rising oil prices and the rumor that two of the largest oil producers (Saudi Arabia and Russia) would agree to an output freeze at their meeting this weekend. Brent crude oil hit a four-month high this past week as it struggled to bounce back from almost two years of sinking prices. If the rumored output freeze comes to fruition, it will help oil prices continue their comeback.

Net inflows into taxable bond funds were fairly evenly split between ETFs (+1.1 billion) and mutual funds (+$849 million). On the ETF side, the largest net inflows belonged to funds in Lipper's Corporate Debt BBB-Rated Funds (+$563 million) and High Yield Funds classifications (+$501 million), while for mutual funds Short Investment Grade Debt Funds took in $556 million of net new money.

Mutual funds (-$4.2 billion) accounted for the lion's share of the negative flows for equity funds, while equity ETFs contributed a $561 million loss to the total. For mutual funds domestic equity funds (-$3.4 billion) and nondomestic equity funds (-$815 million) both suffered significant net outflows, while within the ETF universe, nondomestic equity funds saw $641 million leave and domestic equity funds grew their coffers by $80 million.

Municipal bond mutual funds' extended their string of net inflows to 28 weeks - taking in $521 million of net new money this past week. Funds in the High Yield Muni Debt Funds (+$220 million) and Intermediate Muni Debt Funds (+$214 million) classifications were the main contributors to the week's inflow totals.

The net outflows from money market funds (-$5.1 billion) marked the fourth week in the last five that the group has seen its coffers shrink. During this period, the group had negative net flows of over $68.9 billion, with this past week's activity being the smallest net outflows of the four. The two largest net outflows among the group this past week belonged to funds in the Money Market Funds and Institutional U.S. Government Money Market Funds classifications, which saw $4.6 billion and $4.5 billion, respectively, leave.