Junk bond funds lose $568 million this week, third net outflow in last four weeks

By Paul Deckelman

New York, May 25 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – once again faltered in the latest reporting week, posting their third net outflow in the last four weeks, according to numbers released on Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $568 million more left those weekly reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday, May 24.

That outflow follows the $650 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 May 17, which in turn had followed a pair of outflows before that – a $1.73 billion cash hemorrhage during the week ended May 10 and a $386 million downturn in the week ended May 3.

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

Year-to-date outflow widens

After a relatively strong start to the year, March, and then April, turned as choppy and changeable as May is now proving to be.

According to a Prospect News analysis of the data, this week’s outflow was the 11th so far this year, versus 10 inflows during that time.

It was the sixth cash loss in the last 10 weeks, dating back to the week ended March 22, versus four inflows during that stretch.

It widened the estimated year-to-date net outflow number to $6.01 billion from $5.44 billion last week.

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

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

They had posted six inflows during the first 10 reporting weeks of the year, reaching 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.

EPFR sees small outflow

Another fund-tracking service, the Cambridge, Mass.-based EPFR Global, meanwhile saw a net outflow of under $100 million during the latest week, according to a market source.

That setback was in contrast to last week, when EPFR had reported an inflow “just a bit more than the Lipper number” during the week, according to the source.

That medium-sized cash gain last week had followed the $1.2 billion outflow during the week ended May 10, 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 a month ago, 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 general direction, as has happened over the last several weeks, their actual numbers may sometimes vary widely, as was the case during the April 26 week, with AMG/Lipper reporting just a smallish inflow and EPFR calculating a large cash gain – $291 million for the former and over $1 billion for the latter.

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 nine outflows, versus AMG/Lipper having seen 10 cash gains and 11 cash losses.

IG corporates see gain

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 23rd consecutive gain overall and their 21st straight inflow this year, with no outflows yet recorded for 2017.

The Lipper data indicated that the funds saw a net inflow of $2.09 billion during the reporting week ended Wednesday.

That follows the inflows of $3.1 billion recorded last week, the $2.07 billion during the week ended May 10, the $1.05 billion seen during the week ended May 3, as well as the $4.7 billion inflow recorded a month ago, during the week ended April 26.

The latest inflow brought the year-to-date surge so far up to an estimated $56.35 billion this week – the peak 2017 cumulative inflow level so far, versus $54.26 billion seen last week, the previous high point for the year.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.