Junk funds add $650 million on week, first inflow after two outflows

By Paul Deckelman

New York, May 18 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – moved back to the upside in the latest reporting week, posting their first net inflow after two straight weekly net outflows, according to numbers released on Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $650 million more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, May 17.

That inflow follows the $1.73 billion 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 10 – the funds’ second straight downturn, following a $386 million downturn in the week ended May 3 and their fourth loss in the previous five weeks.

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

April and, before that, March, had been as choppy and changeable as May is proving to be.

Year-to-date outflow widens

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

But it was just the fourth cash gain in the last 10 weeks, dating back to the week ended March 15, versus six outflows during that stretch.

It narrowed the estimated year-to-date net outflow number to $5.44 billion from $6.09 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 seen during the past two months, the flows had shown a relatively strong start to the year.

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 medium-sized inflow

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, meanwhile saw a net inflow “just a bit more than the Lipper number” during the week, according to a market source.

That medium-sized cash gain had followed last week’s $1.2 billion outflow, the source said.

Before that had come two straight weeks of gains – just under $300 million during the week ended May 3, and more than $1 billion during the week ended April 26.

The May 3 inflow occurred during a week when AMG/Lipper, as noted, had posted a net outflow,

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 happened this week and last week, their actual numbers may sometimes vary widely, as was the case during the April 26 week, with AMG/Lipper reporting a smallish inflow and EPFR calculating a large cash gain.

And occasionally, the two companies’ numbers may even diverge completely, as happened during the aforementioned May 3 week and before that, during the week ended March 22 – when EPFR saw a $1.39 billion outflow against AMG/Lipper’s $736 million inflow.

Taking those differences into account, EPFR has now seen 12 inflows so far this year and eight outflows, versus AMG/Lipper having seen 10 cash gains and 10 cash losses.

IG corporates see sizable gain

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 22nd consecutive gain overall and their 20th straight inflow this year, with no outflows yet recorded for 2017.

The Lipper data indicated that the funds saw a net inflow of $3.1 billion during the reporting week ended Wednesday.

That follows the $2.07 billion recorded last week and the $1.05 billion during the week ended May 3.

The latest inflow brought the year-to-date surge so far up to an estimated $54.26 billion this week – the peak 2017 cumulative inflow level so far, versus $51.16 billion seen last week, the previous high point for the year.

© 2015 Prospect News.
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