Junk funds lose $1.73 billion this week, second consecutive downturn

By Paul Deckelman

New York, May 11 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – remained clearly on the downside in the latest reporting week, posting their second straight outflow and their fourth cash loss in the last five weeks, according to numbers released on Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $1.73 billion more left those weekly reporting only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday, May 10.

That outflow follows the $386 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 May 3.

Those two weeks of outflows, totaling $2.11 billion, follow a $291 million net inflow during the week ended April 26.

That inflow had followed two consecutive outflows totaling $710 million – the $362 million cash loss during the week ended April 19 and, before that, a $348 million outflow recorded during the week ended April 12.

Those two outflows were in stark contrast to the $2.38 billion net inflow seen during the week ended April 5, the biggest inflow so far this year and the largest since the $4.351 billon inflow for the week ended July 13, 2016.

Year-to-date outflow widens

According to a Prospect News analysis of the data, this week’s outflow was the 10th so far this year, versus nine inflows during that time.

It was also the seventh cash loss in the last 10 weeks, dating back to the week ended March 8, versus just three inflows during that stretch.

It raised the year-to-date net outflow number to $6.09 billion from $4.37 billion last week.

That 2017 net outflow figure remains narrower than the yawning $6.42 billion estimated net outflow seen during the March 15 week – the most cumulative red ink seen for the year so far.

Before their headlong plunge into negative territory during the past two months, the flows had shown a relatively strong start to the year.

They had reached a peak cumulative net inflow total of $1.62 billion during the week ended Feb. 22, and they were still in positive territory for the year to date as recently as the week ended March 1, with a $1.38 billion net inflow, before heading south the following week and staying there after that.

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 corporates see sizable gain

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 21st consecutive gain overall and their 19th straight inflow this year, with no outflows yet recorded for 2017.

The Lipper data indicated that the funds saw a net inflow of $2.7 billion during the reporting week ended Wednesday.

That follows the $1.05 billion recorded last week and the $4.7 billion the week before that, ended April 26.

The latest inflow brought the year-to-date surge so far up to an estimated $51.16 billion this week – the peak 2017 cumulative inflow level so far, versus $49.09 billion seen last week, the previous high point for the year.

© 2015 Prospect News.
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