Junk funds lose $48 million, third modest outflow after two big gains

By Paul Deckelman

New York, Oct. 27 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – stayed in negative territory for a third consecutive week, again registering a modest net outflow after posting two straight large weekly net inflows before that.

Those inflows, in turn, had followed two consecutive weekly outflows.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said Thursday that some $48 million more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the reporting week ended Wednesday, on top of the $160.056 million cash loss reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Oct. 19 and before that, a $72 million outflow during the week ended Oct. 12.

Those three outflows, totaling $280.056 million, followed a pair of sizable inflows – a $1.908 billion cash gain during the week ended Oct. 5 and a $2.011 billion inflow the week before that, ended Sept. 28.

According to a Prospect News analysis of the data, this week’s outflow was the fifth cash loss in the last seven weeks and the sixth in the last 10 weeks, dating back to the week ended Aug. 24.

On a longer-term basis, this week’s outflow was the 20th so far this year, against 23 inflows.

Year-to-date inflow shrinks

With 43 reporting weeks now in the books for 2016, the year-to-date cumulative net inflow eased this week to $10.895 billion from last week’s $10.943 billion, which itself was down from the $11.175 billion recorded during the Oct. 5 week. That latter figure had established a new peak cumulative net inflow for the year so far, surpassing the former mark of $9.982 billion set during the week ended Sept. 7.

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 inflows continue

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, meanwhile recorded a $426 million inflow this week, according to a market source.

Last week, he said, the service had seen “a small inflow,” and the week before that, ended Oct. 12, a cash gain that was “just shy of $600 million.”

In each of those three weeks, EPFR’s calculations showed a net inflow, as opposed to the outflows reported by AMG/Lipper.

This week’s cash gain was the fifth consecutive inflow seen by EPFR.

EPFR’s methodology differs from AMG/Lipper’s, as its fund universe includes many mutual funds and ETFs domiciled outside of the United States, such as 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 frequently 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, as has now happened over the past three weeks.

Taking those kind of differences into account, EPFR has now tabulated 25 inflows on the year versus 18 outflows, compared to AMG/Lipper’s 23 inflows and 20 outflows so far this year.

IG corporates continue rebound

Looking at fund flows for other asset classes, investment-grade corporate funds were back in the black for a second consecutive week, the Lipper data indicated, with a $1.701 billion net inflow on the week.

That follows last week’s $2.431 billion cash addition – a robust comeback from the $666 million net outflow seen during the week ended Oct. 12, which had snapped a 14-week winning streak of continual net inflows which had dated back to early summer, including the most recent previous inflow, the $1.396 billion cash addition during the week ended Oct. 5.

This week’s inflow raised the funds’ year-to-date net inflow to $42.791 billion, versus last week’s $41.09 billion.

This week’s cumulative total established a second consecutive new peak level for the year, according to Prospect News’ analysis of the data, up from last week’s total, which, in turn had been up from $39.325 billion during the Oct. 5 week, which had set a 14th consecutive new weekly peak level for the year.

© 2015 Prospect News.
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