Junk funds gain $1.91 billion on week, second big inflow after losses

By Paul Deckelman

New York, Oct. 6 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – stayed in positive territory this week, posting their second straight large net inflow after two consecutive weekly net outflows.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said Thursday that $1.908 billion more came into the weekly-reporting-only domestic funds than left them in the form of investor redemptions during the reporting week ended Wednesday.

That inflow followed the $2.011 billion cash gain reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Sept. 28.

Those two inflows, totaling $3.919 billion, are in stark contrast with the $2.727 billion of outflows seen in the two weeks before that – $274 million during the week ended Sept. 21 and a $2.453 billion cash bleed during the week ended Sept. 14.

Those outflows followed a $610 million cash addition during the week ended Sept. 7 which, in turn, came on the heels of a $387 million outflow during the week ended Aug. 31 and three weeks of inflows totaling $2.706 billion.

On a longer-term basis, this week’s inflow was the 23rd so far this year, against 17 outflows.

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, besides the major cash drain three weeks ago.

Year-to-date inflow grows

With 40 reporting weeks now in the books for 2016, the year-to-date cumulative net inflow rose this week to $11.175 billion from last week’s $9.267 billion.

This week’s level established a new peak cumulative net inflow for the year so far, surpassing the former mark of $9.982 billion seen during the Sept. 7 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 Prospect News 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 this week that was “a bit higher” than the $1.908 billion number reported by AMG/Lipper, according to a market source.

It was the second consecutive large inflow seen by EPFR, whose inflow last week was “closer to $3 billion,” according to the market source.

That was a solid rebound from the large outflows seen over the previous two weeks, the source said – more than $1 billion during the Sept. 21 week and “more than $1 billion bigger” than the $2.453 billion cash drain reported by AMG/Lipper during the Sept. 14 week.

Those outflows, in turn, contrasted with the net inflow that the service reported during the Sept. 7 week, which the source said was “a little under three times” the AMG/Lipper $610 million inflow amount that week, or approximately $1.8 billion, with the U.S.-domiciled portion of that “more than double” the AMG/Lipper figure, or around $1.2 billion.

EPFR’s methodology differs from AMG/Lipper’s, as its fund universe includes many mutual funds and ETFs domiciled outside of the United States, including strictly European junk funds and broader global funds, versus AMG/Lipper’s solely domestic orientation.

Because of that difference, 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.

So far this year, EPFR has tabulated 22 inflows, versus 18 outflows, while AMG/Lipper, as noted, has seen 23 inflows and 17 outflows.

IG corporate funds continue gains

Looking at fund flows for other asset classes, investment-grade corporate funds scored their 14th straight weekly gain this week, with a $1.396 billion net inflow, the Lipper data indicated.

That followed a $2.334 billion inflow during the week ended Sept. 28.

The high-grade funds’ most recent outflow was $639 million during the week ended June 29 – which was the first cash loss after 16 consecutive weeks of gains for the IG corporate funds.

This week’s inflow brought the funds’ year-to-date net inflow up to $39.325 billion, versus last week’s $37.929 billion.

This week’s total established a 14th consecutive new peak level for the year, according to Prospect News’ analysis of the data.

© 2015 Prospect News.
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