Junk funds see $175 million outflow, first loss in four weeks

By Paul Deckelman

New York, July 28 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw their first net outflow in four weeks this week, following three straight weekly outflows before that, market sources said Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $175.43 million more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday.

The outflow was in contrast to the $322 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 July 20.

That relatively modest inflow, in turn, had followed the near-record inflow reported the week before – the $4.351 billion cash injection seen during the week July 13. That was the second-largest cash surge on record, only lagging the $4.967 billion inflow recorded during the week ended March 2 – the biggest inflow seen by AMG since it began tracking fund flows in 1992.

AMG/Lipper also reported a $1.798 billion inflow during the week ended July 6.

Those three inflows, totaling $6.471 billion, followed three straight outflows totaling $4.196 billion – the $1.628 billion cash loss during the week ended June 29, a $766 million outflow in the week ended June 22 and a $1.802 billion hemorrhage seen during the week ended June 15.

Those three outflows followed two weeks of inflows.

The latest week’s inflow was the 13th cash drain since the start of the year versus the 17 inflows in that time, according to a Prospect News analysis of the figures.

The year began with outflows seen in five out of the first six weeks – then followed by a long stretch, between mid-February and late April, during which inflows were seen in 10 weeks out of 11.

Since May, the flows have been inconsistent and choppy, mostly with one or two inflows alternating with a like number of outflows.

Year-to-date inflow slackens

With 30 reporting weeks now in the books for 2016, the year-to-date net inflow declined to $9.517 billion, Lipper said, down from last week’s $9.962 billion, the year-to-date peak inflow total.

After the string of outflows early in the year, the fund flows 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 were 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.

IG corporate funds continue gains

Looking at fund flows for other asset classes, investment-grade corporate funds scored their fourth straight weekly gain, with a $1.475 billion net inflow, the Lipper data indicated.

The funds had also taken in a net of $894 million last week, $2.934 billion during the July 13 week and $907 million during the July 6 week, bouncing back after a net outflow of $638.599 million during the June 29 week – which had been the first cash loss seen after 16 consecutive weeks of cash gains for the IG corporate funds.

This week’s inflow brought the funds’ year-to-date net inflow up to an estimated $20.799 billion from $19.324 billion last week. This week’s total established a fourth consecutive new peak level for the year, according to Prospect News’ analysis of the data.

Meanwhile, loan participation funds – which have been consistently negative for most of this year – were back on the downside this week after a rare two straight weeks of relative strength.

Those funds saw a net outflow of $15.422 million, versus inflows of $69 million last week and $136.5 million the week before that.

The outflow in the latest week deepened the loan funds’ year-to-date net outflow figure to $5.392 billion, Lipper said.

© 2015 Prospect News.
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