Junk funds see $145 million inflow, second cash gain in three weeks

By Paul Deckelman

New York, June 2 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – were back on the upside this week, market sources said Thursday, at least partially rebounding from last week’s loss.

It was the funds’ second such winning week out of the last three.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that some $145 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 was in contrast to the $562.3 million outflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended May 25.

Fund flows have recently been choppy. Before this week’s cash gain and last week’s outflow, 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 had in turn 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 a Prospect News analysis of the figures.

The latest week’s outflow was the 13th cash gain since the start of the year, versus nine outflows.

Year-to-date inflow rises

With 22 reporting weeks now in the books for 2016, the year-to-date net inflow rose to $6.645 billion, up from $6.5 billion 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.

Corporates funds rise

Looking at fund flows for other asset classes, investment-grade corporate funds saw a net inflow this week of $287 million, the Lipper data indicated, bringing its year-to-date net inflow up to an estimated $11.287 billion.

It was the 13th consecutive week of cash gains for the IG corporate funds.

That followed the $872.9 million inflow seen last week, when the year-to-date total stood at $11 billion, according to Lipper.

© 2015 Prospect News.
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