U.S. Weekly FundFlows Insight Report: Large Seasonal-Related Outflows For Money Market Funds For The Fund-Flows Week

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Includes: EMB, GOVT, IEF, IWM, LQD, SPY, XLF, XLU
by: Tom Roseen
Summary

For the first week in four, investors were overall net redeemers of fund assets (including those of conventional funds and ETFs), withdrawing $44.6billion for Lipper's fund-flows week ended April 17, 2019.

For the third week in a row, equity ETFs witnessed net inflows, taking in a little more than $7.3 billion for the most recent fund-flows week.

For the sixth week in a row, taxable fixed income ETFs witnessed net inflows, taking in $2.0 billion.

For the ninth week running, conventional fund (ex-ETF) investors were net redeemers of equity funds, withdrawing $1.8 billion.

For the fourteenth consecutive week, taxable bond funds (ex-ETFs) witnessed net inflows, taking in $1.6 billion this past week while posting a 0.12% loss for the flows week.

For the first week in four, investors were overall net redeemers of fund assets (including those of conventional funds and ETFs), withdrawing $44.6
billion for Lipper's fund-flows week ended April 17, 2019. However, the headline numbers are misleading. Fund investors were net purchasers of equity
funds (+$5.5 billion), taxable fixed income funds (+$3.7 billion), and municipal bond funds (+$679 million), while being net redeemers of money market
funds (-$54.5 billion) - the group's largest net redemption since the week ended August 3, 2011.

Market Wrap-Up

Markets generally remained range-bound ahead of the start to the Q1 earnings reporting season, which kicked off in earnest during the fund-flows week with reports from JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) starting the deluge. U.S. markets initially rallied on better-than-expected earnings reports from a few bellwether stocks, but the NASDAQ got a shot in the arm - rising above the 8,000 mark for the first time since October 3, 2018 - after Apple (NASDAQ:AAPL) agreed to an undisclosed settlement with Qualcomm. The Russell 2000 Price Only Index (-0.88%) suffered the only downside-performance during the flows week of the broadly followed U.S. indices. The Dow Jones Industrial Average Price Only Index (+1.12%) posted the strongest returns of the broad-based U.S. indices for the flows week, followed by the S&P 500 Price Only Index's 0.42% and the NASDAQ Composite Price Only Index's 0.40% plus-side returns. News that European Union leaders agreed to postpone Brexit until October 31 and that U.S./China trade negotiations were still on track pushed international markets higher, with the Xetra DAX Total Return Index (+2.54%) posting the strongest plus-side returns, followed by the Nikkei 225 Price Only Index (+1.75%) and Shanghai Composite Price Only Index (+1.11%).

On Thursday, April 11, investors struggled to find a catalyst that would help propel markets higher. Minutes from the Federal Open Market Committee's March meeting showed that Federal Reserve officials dropped plans for additional rate hikes in 2019 due to concerns over the U.S. and global economies. News that first-time jobless claims dropped to a 50-year low the week prior was not enough to push markets higher on the day. However, on Friday, April 12, the equity markets were pushed higher on strong bank earnings and after Disney (NYSE:DIS) announced it would launch its own video-streaming business. The markets also got a boost after Chinese trade data showed that March exports rose by 12.2% from a year earlier.

On Monday, April 15, U.S equity markets suffered small declines after Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) showed declines in earnings compared to Q1 2018, but still beat analysts' lowered expectations for quarterly profits. Nonetheless, the markets closed higher on Tuesday as the NASDAQ closed above the 8,000-mark despite investors punishing healthcare insurers over concerns that new health-care reform measures could weigh on industry profits.
Investors also shrugged off news that March industrial production fell 0.1% in contrast to economists' expectations for a 0.1% rise. The healthcare sector
continued its downward spiral on Wednesday, April 17, over concerns that future policy changes might have an adverse effect on the sector. Asian stocks closed generally higher on the day after data showed the Chinese economy grew at a 6.4% year-over-year clip in Q1 2019, beating analyst expectations.

Exchange-Traded Equity Funds

For the third week in a row, equity ETFs witnessed net inflows, taking in a little more than $7.3 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$5.8 billion) for the third consecutive week. Meanwhile, nondomestic equity ETFs also witnessed net inflows for the third week in a row, taking in $1.5 billion this past week. SPDR S&P 500 ETF (SPY, +$5.1 billion) and Financial Select Sector
SPDR ETF (XLF, +$865 million) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, Utilities Select Sector SPDR ETF (XLU, -$879 million) experienced the largest individual net redemptions and iShares Russell 2000 ETF (IWM, -$803 million) suffered the second-largest net redemptions of the week.

Exchange-Traded Fixed Income Funds

For the sixth week in a row, taxable fixed income ETFs witnessed net inflows, taking in $2.0 billion. APs were net purchasers of corporate investment-grade debt ETFs (+$916 million) and corporate high yield ETFs (+$724 million), while being net redeemers of international & global debt ETFs (-$315 million). iShares 7-10 Year Treasury Bond ETF (IEF, +$451 million) and iShares US Treasury Bond ETF (GOVT, +$350 million) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD, -$463 million) and iShares JPM USD Emerging Markets Bond ETF (EMB, -$361 million) handed back the largest individual net redemptions for the week. For the second week in a row, municipal bond ETFs witnessed net inflows, taking in $86 million.

Conventional Equity Funds

For the ninth week running, conventional fund (ex-ETF) investors were net redeemers of equity funds, withdrawing $1.8 billion. Domestic equity funds, handing back a little less than $1.3 billion, witnessed their tenth weekly net outflows while posting a 0.02% loss on average for the fund-flows week. Their nondomestic equity fund counterparts, posting a 0.52% gain on average, witnessed their fourth consecutive weekly net outflows (-$552 million this past week). On the domestic equity side, fund investors gave a cold shoulder to large-cap funds (-$1.5 billion net) and small-cap funds (-$337 million), while investors on the nondomestic equity side were net sellers of international equity funds (-$391 million) and global equity funds (-$161 million).

Conventional Fixed Income Funds

For the fourteenth consecutive week, taxable bond funds (ex-ETFs) witnessed net inflows, taking in $1.6 billion this past week while posting a 0.12% loss for the flows week. Fund investors were net purchasers of corporate investment-grade debt funds (+$1.4 billion) and high yield funds (+$376 million), while balanced funds (-$497 million) suffered the largest net redemptions of the group. For the fifteenth straight week, municipal bond funds (ex-ETFs) witnessed net inflows - taking in $593 million - while posting a 0.07% loss on average (their first weekly market decline in 12).

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.