Fund flows strong; EPFR reports $1.1 billion inflow in latest week

By Paul Deckelman

New York, May 24 - The flow of funds into high-yield mutual funds and exchange-traded funds - a key barometer of overall junk market liquidity trends - remained strong this week, major fund-tracking services said, as investors continued to put their dollars to work there in order to gain bigger returns in the current relatively low-interest-rate environment.

One of the services, EPFR Global, of Cambridge, Mass., told Prospect News on Friday morning that the funds it tracks saw a net inflow of $1.1 billion in the week ended Wednesday.

It was the sixth consecutive weekly inflow reported by EPFR and represents a considerable improvement over the meager $94 million which the service reported the previous week, ended May 15. During that six-week stretch, inflows have totaled about $7.7 billion, according to a Prospect News analysis of the company's data.

On a year-to-date basis, EPFR has now seen 18 weeks of inflows, versus just three weeks of outflows since the start of 2013, with a cumulative net inflow during that time frame of some $16.74 billion, according to the analysis.

On Thursday evening, the rival AMG Data Services reported that during the week ended Wednesday, $376 million more came into those funds than left them. It was a solid comeback following the $402.8 million outflow seen the week before, ended May 15, which had been the first such cash loss recorded after four consecutive weeks of inflows before that totaling about $2.02 billion, according to a Prospect News analysis of the figures from Arcata, Calif.-based AMG, a unit of the Lipper analytics division of Thomson Reuters Corp.

Twenty-one weeks into the year, 2013 net inflows as reported by Lipper so far have amounted to about $3.1 billion, according to the analysis. There have now been 14 inflows and seven outflows reported by Lipper so far this year.

AMG/Lipper and EPFR differ in their methodologies - EPFR includes non-U.S.-domiciled funds among those it tracks, while AMG/Lipper's focus is strictly domestic - but their trends generally point in the same direction, even though their figures can vary widely from one another for that reason.

Cumulative fund-flow estimates, whether from EPFR or from AMG/Lipper, may be revised upward or downward or be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

The continued flow of fresh cash into junk - and the mutual funds and ETFs represent but a small, though very observable and quantifiable percentage of the total amount of investor money coming into or leaving the junk market - has been seen by analysts as a key element behind the high-yield secondary sphere's strong performance last year versus other fixed-income asset classes and its record active new-deal pace. That pace easily topped the $350 billion mark.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.