Junk funds lose $240 million in week, first loss after four gains

By Paul Deckelman

New York, March 2 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – fell into negative territory in the most recent reporting week, their first setback after four consecutive weeks of gains, according to data released on Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $240 million more left the weekly reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday.

That net outflow followed the $726 million net inflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Feb. 22.

Last week’s cash gain had followed three consecutive additional inflows, $158 million during the week ended Feb. 15, $442 million during the week ended Feb. 8 and $413 million during the week ended Feb. 1.

Those four inflows, totaling $1.739 billion, had represented a clear rebound from the two weeks of outflows totaling $1.419 billion which came before that.

The new year had begun with a pair inflows totaling $1.298 billion.

Year-to-date inflows retreat

According to a Prospect News analysis of the data, this week’s outflow – the third so far this year, against six inflows – was also the third in the last 10 weeks dating back to the Dec. 28 week, versus seven inflows during that stretch.

It lowered the year-to-date net inflow total to $1.378 billion from $1.618 billion last week – which had established a new estimated peak year-to-date inflow total, eclipsing the former mark of $1.298 billion seen during the week ended Jan. 11.

The cumulative flow numbers had been recovering over the previous four weeks from the estimated $121 million year-to-date outflow recorded during the week ended Jan. 25, the only week so far in which the year-to-date total has dipped into the red.

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 records sixth straight gain

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, meanwhile saw a net inflow during the week of “over five times” the amount of the outflow recorded by AMG/Lipper, according to a market source.

It was the sixth consecutive large inflow recorded by EPFR. Last week, the source said the cash gain had been “a little north of $1 billion” and “close to $1 billion,” the week before that, ended Feb. 15.

EPFR’s methodology differs from AMG/Lipper’s as its fund universe includes many mutual funds and ETFs domiciled outside 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 usually point pretty much in the same direction, as they did last week, their actual numbers may sometimes vary widely – for instance, EPFR tallied an inflow of nearly $1 billion during the Feb. 15 week and in the $2 billion area during the previous two weeks before that while AMG/Lipper was reporting considerably smaller inflows in each of those weeks.

And occasionally, the numbers may even diverge completely, with one service reporting an inflow while the other sees an outflow, as happened this week and before that during the Jan. 25 week, when EPFR saw an inflow “north of $1.5 billion” – even though AMG/Lipper had reported a $532 million outflow.

Taking those differences into account, EPFR has now seen eight inflows so far this year and one outflow, versus AMG/Lipper having seen six cash gains and three cash losses.

IG corporates continue surge

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 11th consecutive gain overall and their ninth straight inflow seen so far this year, with no outflows yet recorded for 2017.

The Lipper data indicated that the funds saw net inflows of $3.045 billion this week.

That followed the $2.566 billion seen last week, ended Feb. 22.

The latest inflow brought the year-to-date surge so far up to an estimated $25.952 billion this week – the peak 2017 cumulative inflow level so far, versus $22.907 billion last week, the previous high point.

© 2015 Prospect News.
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