Junk funds see $610 million inflow, fourth gain in last five weeks

By Paul Deckelman

New York, Sept. 8 – 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, rebounding from last week’s loss, which had been the first downturn after three consecutive weeks of net inflows.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said Thursday that some $610 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 a solid turnaround that more than offset the $387 million 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 Aug. 31.

That cash loss had followed three straight weeks of inflows totaling $2.706 billion – a $162 million inflow during the week ended Aug. 24 and before that inflows of $889 million during the week ended Aug. 17 and $1.655 billion during the week ended Aug. 10.

According to a Prospect News analysis of the data, this week’s inflow was the fourth upturn in the last five weeks and the seventh in the last 10 weeks, dating back to the week ended July 6.

On a longer-term basis, this week’s inflow was the 21st seen so far this year against 15 outflows.

New peak year-to-date inflow

With 36 reporting weeks now in the books for 2016, the year-to-date cumulative net inflow rose this week to an estimated $9.982 billion from last week’s $9.372 billion.

That established a new peak level for the year so far, surpassing the previous high-water mark, the estimated $9.759 billion cumulative inflow seen during the Aug. 24 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 had been 28 inflows and 24 outflows in that time, 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 large inflow

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, meanwhile recorded a net inflow “a little under three times” the AMG/Lipper inflow amount, according to a market source, or approximately $1.8 billion.

He also said that the inflow amount just for high-yield funds domiciled in the United States was “more than double” the AMG/Lipper total, or somewhere north of around $1.2 billion.

(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).

It was the fifth consecutive overall cash gain reported by the funds that EPFR tracks; last week, the source said, EPFR had seen an overall net inflow of around $300 million, although the U.S.-based funds that it follows did collectively report a net outflow.

Because EPFR’s methodology does differ from AMG/Lipper’s, including a much broader range of funds in its universe, that means that while the two services’ respective weekly results usually point pretty much in the same direction, their actual numbers may sometimes vary widely – and occasionally they may diverge completely, with one service reporting an inflow in a given week while the other sees an outflow, or vice versa.

The latter scenario has happened six times so far this year – most recently last week, when the overall roughly $300 million net inflow reported by EPFR contrasted with the AMG/Lipper $387 million net outflow.

So far this year, EPFR has tabulated 20 inflows, versus 16 outflows, while AMG/Lipper, as noted, has seen 21 inflows and 15 outflows.

IG corporate funds continue gains

Looking at fund flows for other asset classes, investment-grade corporate funds scored their 10th straight weekly gain, with a $2.804 billion net inflow, the Lipper data indicated.

That followed a $225 million inflow during the week ended Aug. 31.

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 for the IG corporate funds.

This week’s inflow brought the funds’ year-to-date net inflow up to an estimated $32.904 billion, versus last week’s $30.1 billion.

This week’s total established a 10th consecutive new peak level for the year, according to Prospect News’ analysis of the data.

© 2015 Prospect News.
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