U.S. Funds Take In Net New Money For The Fifth Straight Week

by: Lipper Alpha Insight

By Patrick Keon

Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) recorded net inflows of over $10.8 billion for the fund-flows week ended Wednesday, February 22. This was the fifth consecutive week of overall net inflows and the second week in three in which all of the fund macro-groups had positive flows. The largest net inflows belonged to taxable bonds funds (+$3.98 billion), followed closely by money market funds (+$3.96 billion). Meanwhile, equity funds and municipal bond funds took in $2.7 billion and $149 million, respectively, of net new money.

The broad-based equity indices recorded positive returns for a third consecutive fund-flows week. The Dow Jones Industrial Average posted a gain of 0.79% for the week, while the S&P 500 Index appreciated 0.58%. The Dow reached a mark that had not been seen in thirty years when it closed at its ninth consecutive record high on Wednesday, February 22. For the three-week period the Dow and the S&P were up 4.4% and 3.7%, respectively. This week’s results were primarily due to the enthusiasm generated by President Donald Trump’s recent statements that his pro-economic expansion policies (financial deregulation, tax cuts) would be made public soon.

The net inflows for taxable bond funds were fairly evenly split between mutual funds (+$2.2 billion) and ETFs (+$1.8 billion). The week’s inflows marked the eighth straight weekly net inflows for taxable bond mutual funds and the fifth straight net inflow for taxable bond ETFs. Lipper’s Short Investment-Grade Debt Funds (+$620 million) and Loan Participation Funds (+$593 million) classifications recorded the largest positive flows for taxable bond mutual funds. For individual ETFs iShares iBoxx $ High Yield Corporate Bond (HYG, +$412 million) and iShares iBoxx $ Investment Grade Corporate Bond (LQD, +$411 million) recorded the largest positive flows.

Equity ETFs (+$2.9 billion) were responsible for all of the net inflows for the equity group, while equity mutual funds saw their coffers shrink by $176 million. The largest net inflows into individual ETFs belonged to PowerShares QQQ Trust (QQQ, +$764 million) and iShares Core S&P 500 (IVV, +$584 million), while SPDR S&P 500 (NYSEARCA:SPY) saw $1.6 billion leave. For mutual funds domestic equity funds suffered net outflows of $475 million, while nondomestic equity funds took in $299 million.

Municipal bond mutual funds (+$186 million) recorded their seventh consecutive week of net inflows. The High Yield Muni Debt Funds category, with positive flows of $225 million, accounted for all of this increase.

Money market funds recorded net inflows of almost $4.0 billion for the week; Institutional U.S. Treasury Money Market Funds (+$4.5 billion) and Institutional Money Market Funds (+$2.2 billion) contributed the most to the overall net inflows. Meanwhile, Institutional U.S. Government Money Market Funds (-$2.1 billion) and U.S. Government Money Market Funds (-$1.4 billion) had the largest net outflows.