Junk funds see $387 million outflow, first loss after three inflows

By Paul Deckelman

New York, Sept. 1 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw their first loss this week after three consecutive weeks of net inflows.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said Thursday that some $387 million more left weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday.

That cash loss followed the $162 million inflow reported last Thursday for the seven-day period ended Aug. 24 by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division.

Before that had come inflows of $889 million during the week ended Aug. 17 and $1.655 billion during the week ended Aug. 10.

Those three inflows totaled $2.706 billion.

According to a Prospect News analysis of the data, this week’s outflow was the 15th so far this year, against 20 inflows.

The year had begun with outflows in five out of the first six weeks – which were 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 weeks of inflows alternating with a like number of outflows.

Recent weeks have seen several extremely large fund flows.

Among them was the $4.351 billion cash injection during the week ended July 13. The Prospect News data indicated that this was the second-largest cash surge on record, only lagging the $4.967 billion inflow recorded during the week ended March 2 – the single biggest inflow seen by AMG/Lipper since it began tracking fund flows in 1992.

There was also a $2.464 billion outflow recorded during the week ended Aug. 3.

According to the Prospect News analysis of the figures, that Aug. 3 week outflow was the biggest cash loss seen by the junk funds so far this year, topping the net $2.107 billion that left the funds during the week ended Jan. 13. It was also the largest outflow the funds had experienced since the week ended Dec. 16, 2015, when a $3.811 billion cash hemorrhage was recorded.

Year-to-date inflow declines

With 35 reporting weeks now in the books for 2016, the year-to-date cumulative net inflow decreased this week to $9.372 billion from last week’s $9.759 billion, the analysis indicated. The previous figure established a new year-to-date peak inflow total, surpassing the earlier high-water mark of $9.694 billion touched during the July 20th week.

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 ninth straight weekly gain, with a $225 million net inflow, the Lipper data indicated.

That followed a $1.924 billion inflow during the week ended Aug. 24.

The high-grade funds’ most recent outflow was $638.599 million, during the week ended June 29 – which had been the first cash loss seen after 16 consecutive weeks of cash gains before that.

This week’s inflow brought the funds’ year-to-date net inflow up to $30.1 billion, versus last week’s $29.875 billion.

This week’s total established a ninth consecutive new peak level for the year, according to Prospect News’ analysis of the data.

© 2015 Prospect News.
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