Junk funds see $748 million inflow, second straight cash gain

By Paul Deckelman

New York, June 9 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – were on the upside for a second consecutive week, market sources said Thursday, and for a third week out of the last four.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $748.153 million more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday.

That inflow came on top of the $145 million inflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended June 1.

The two inflows – totaling $893.153 million – stood in contrast to the $562.3 million outflow seen during the week ended May 25.

The fund flows have been choppy in recent weeks, according to a Prospect News analysis of the figures.

Before the outflow in the May 25 week, the funds had seen a $1.135 billion inflow during the week ended May 18, which had followed two straight weeks of downturns totaling $3.712 billion, a $1.807 billion outflow for the week ended May 4 and then a $1.905 billion cash loss for the week ended May 11.

Those two weeks of downturns, in turn, had broken a string of four consecutive weeks of inflows totaling nearly $1.972 billion between the week ended April 6 and the week ended April 27.

The four weeks of April inflows had meantime been part of a longer stretch of 10 weeks out of the prior 11, dating back to the week ended Feb. 17, during which more cash had come into those funds than flowed out of them, according to the analysis.

The latest week’s inflow was the 14th cash gain since the start of the year versus nine outflows.

Year-to-date inflow rises

With 23 reporting weeks now in the books for 2016, the year-to-date net inflow rose to $7.418 billion, Lipper said – up from an estimated $6.645 billion seen last week.

The year-to-date inflow total remains well down from the $9.664 billion recorded during the April 27 week, which had been the fourth consecutive new peak level for the year so far, according to the Prospect News analysis.

The fund flows – which started the year off with a string of outflows – reached their peak net outflow level for the year during the week ended Feb. 10, when they showed cumulative red ink of $5.165 billion.

For all of 2015, meanwhile, there had been 28 inflows and 24 outflows, the analysis showed, producing a net outflow for the year of $7.046 billion.

Cumulative fund-flow estimates may be revised upward or downward or they may be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

EPFR sees big inflow

Another fund-tracking service, Cambridge. Mass.-based EPFR Global, meanwhile recorded a roughly $2.5 billion inflow during the latest week, according to a market source.

EPFR’s methodology differs from AMG/Lipper’s, as its fund universe includes many non-U.S.-domiciled mutual funds and ETFs, including strictly European junk funds and broader global funds, versus AMG/Lipper’s solely domestic orientation.

Thus, while the two services’ respective weekly results usually point pretty much in the same direction, their actual numbers may sometimes vary widely – and other times may diverge completely, with one service reporting an inflow while the other sees an outflow, or vice versa.

The latter scenario has happened at least three times so far this year and several times last year,

IG corporates, loan funds rise

Looking at fund flows for other asset classes, investment-grade corporate funds saw a net inflow this week of $1.573 billion, the Lipper data indicated, bringing their year-to-date net inflow up to $12.89 billion

It was the 14th consecutive week of cash gains for the IG corporate funds.

That followed the $287 million inflow Lipper saw last week, when the year-to-date total stood at an estimated $11.317 billion.

Leveraged loan participation funds – which have mostly seen outflows so far this year – saw a $100.127 million net inflow on the week, the third consecutive advance.

That brought their year-to-date net outflow down to $4.883 billion, Lipper said.

The funds had risen by an estimated $16.8 million last week, and by $62.4 million during the May 25 week.

© 2015 Prospect News.
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