Junk funds see $883 million inflow in latest week, first gain for 2016

By Paul Deckelman

New York, Jan. 28 – High-yield mutual funds and exchange-traded funds, considered a reliable barometer of overall junk market liquidity trends, posted their first inflow on the year so far, breaking a string of three straight outflows. It was the second cash gain in the last five weeks.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said on Thursday that $883.3 million more came into those weekly-reporting-only domestic funds than had left them during the week ended Wednesday.

That stood in contrast to the $2.04 billion net outflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Jan. 20.

Before that had come outflows of $2.11 billion in the week ended Jan. 13, the year’s largest so far, and $809.1 million in the week ended Jan. 6.

The most recent previous inflow had been the $114.1 million cash gain that was recorded during the week ended Dec. 30.

This week’s inflow was only the third such cash injection seen during the last 10 weeks, according to a Prospect News analysis of the figures.

Besides the cash addition in the Dec. 30 week, the only other inflow seen during that time period was $397.6 million during the week ended Dec. 2, with outflows in all of the other intervening weeks.

These included the two biggest net outflows of last year, the analysis indicated – the $3.81 billion cash hemorrhage seen for the week ended Dec. 16 and the $3.46 billion cash bleed seen in the week before that, ended Dec. 9.

The latter two outflows were, respectively, also the third- and fourth-largest net outflows on record at AMG/Lipper, which has been watching fund flows since 1992, the analysis indicated.

Year-to-date outflow narrows

With four reporting weeks in the books for 2016 – three of them outflows against this week’s inflow, as noted – the year-to-date net outflow figure fell to $4.08 billion this week from $4.96 billion last week, which had been the peak cumulative net outflow level for 2016 so far.

In 2015, meanwhile, there had been 27 inflows and 25 outflows in that time, the Prospect News analysis showed, producing a net outflow for the year of $7.05 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.

Corporates funds lose again

Looking at the fund flows for other asset classes, investment-grade corporate bond funds posted a net outflow of $1.19 billion during the week ended Wednesday, according to Lipper.

It was the 10th consecutive retreat for the corporate funds, a losing streak dating back to the week ended Nov. 25.

The funds had seen a $442 million outflow last week, which had followed a $740 million cash loss during the Jan. 13 week and a $1.13 billion downturn during the Jan. 6 week.

With four Thursday-to-Wednesday reporting weeks of the new year complete, the year-to-date outflow total for 2016 rose to $3.46 billion, its peak level for the year so far, from $2.31 billion last week, the previous peak cumulative red ink total.

The corporate funds had closed out 2015 during the week ended Dec. 30 with a $1.66 billion outflow.

Loan funds’ slide continues

Meanwhile, leveraged loan participation funds, which struggled all of the last two years, remained under pressure during the first month of the new year, according to the latest Lipper data.

Some $783.7 million more left those funds than came into them during the week ended Wednesday.

It was the loan funds’ fourth consecutive outflow so far in 2016, versus no inflows in that time.

The latest week’s outflow brings the year-to-date net outflow total to $2.49 billion, the peak cumulative loss for the year so far, having widened from the previous peak level of $1.71 billion last week, according to a Prospect News analysis of the data.

On a longer-tem basis, the latest outflow was the loan funds’ 27th consecutive downturn, according to the analysis.

© 2015 Prospect News.
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