By Patrick Keon
Thomson Reuters Lipper's fund macro-groups (including both mutual funds and ETFs) suffered net-negative flows of $17.7 billion for the fund-flows week ended Wednesday, November 1. Money market funds were responsible for the lion's share of the net outflows (-$21.3 billion), while municipal bond funds had $655 million leave their coffers. Equity funds (+$3.6 billion) and taxable bond funds (+$678 million) were the only fund macro-groups taking in net new money for the week. For taxable bond funds, it was the seventeenth consecutive week of net-positive flows.
The S&P 500 Index (+0.87%) and the Dow Jones Industrial Average (+0.45%) both posted positive returns for the fund-flows trading week. The week's increases pushed the year-to-date return for the Dow and the S&P 500 to 18.58% and 15.21%. The markets took strength this past week from anticipation of the unveiling of the Donald Trump administration's tax reform bill as well as continued positive corporate earnings announcements. As usual, the Federal Reserve was at the center of the week's economic news. The Fed kept interest rates unchanged at its policy meeting during the week but indicated economic conditions are right for another rate increase in December. Positive news supporting a rate hike included the U.S. consumer confidence index hitting a 17-year high (125.90) in October and wages rising 0.7% for Q3 2017 after a 0.5% increase for Q2.
ETFs (+$4.8 billion) had net-positive flows for the fifth straight week. Equity ETFs (+$6.4 billion) were responsible for all the net inflows, while taxable bond ETFs (-$1.5 billion) and municipal bond ETFs (-$149 million) both saw money leave. For equity ETFs, PowerShares QQQ (QQQ, +$1.8 billion) and iShares Core S&P 500 (IVV, +$1.7 billion) contributed the two largest net-positive flows. The largest net inflows among the taxable bond ETF group belonged to iShares Core Total US Dollar Bond (IUSB, +$516 million) and iShares Core US Aggregate Bond (AGG, +$171 million).
Equity Mutual Funds
Equity mutual funds (-$2.8 billion) suffered their nineteenth straight weekly net outflows. As usual, the net outflows came from domestic equity funds (-$3.2 billion), while non-domestic equity funds (+$417 million) took in net new money. The largest net outflows among domestic equity funds belonged to Lipper's Large-Cap Growth Funds peer group (-$989 million), while the largest net inflows among non-domestic equity funds were attributable to the Global Multi-Cap Core Funds (+$410 million) category.
Fixed Income Mutual Funds
Taxable bond mutual funds (+$2.2 billion) took in net new money, while municipal bond mutual funds suffered net outflows of $506 million. The largest net inflows within the taxable bond fund macro-group belonged to Core Plus Bond Funds (+$2.1 billion) and Core Bond Funds (+$616 million). The largest net outflows for municipal bond funds belonged to the California Muni Debt Funds (-$320 million) and High Yield Muni Debt Funds (-$66 million) peer groups.
Money Market Mutual Funds
Money market mutual funds suffered net outflows of approximately $21.3 billion for the week. The Institutional U.S. Government Money Market Funds (-$10.4 billion) and Institutional U.S. Treasury Money Market Funds (-$6.9 billion) peer groups were the largest contributors to the week's net outflows.