Junk funds gain $195 million this week, second inflow in three weeks

By Paul Deckelman

New York, Aug. 3 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – rose moderately this week, according to numbers released on Thursday, after easing slightly the week before.

It was the second gain the funds have seen in the last three weeks, breaking a recent negative pattern.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $195 million more came into those weekly-reporting-only domestic funds than left them during the week ended Wednesday, Aug. 2.

That inflow contrasted with the $21 million outflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended July 26. The smallish outflow had followed a $2.22 billion inflow for the funds during the week ended July 19.

Year-to-date outflow narrows

According to a Prospect News analysis of the data, this week’s inflow was the 15th seen so far this year, versus 16 outflows.

It was the fifth cash gain in the last 10 weeks, dating back to the week ended May 31, versus five cash losses during that time.

Besides this week’s inflow, last week’s outflow and the inflow before that, the 10-week stretch also included four consecutive weeks of outflows totaling $4.16 billion – a $1.14 billion outflow for the week ended July12 and, before that, outflows of $1.16 billion during the week ended July 5, of $1.74 billion during the week ended June 28, and $128 million during the week ended June 21.

Those four outflows had, in turn, followed three straight weeks of net inflows totaling about $1.31 billion.

This week’s inflow narrowed the cumulative year-to-date outflow to $6.47 billion from last week’s $6.67 billion.

It remained less than the $8.87 billion outflow total posted during the July 12 week, the 2017 outflow wide point, as well as the biggest cumulative outflow number the junk funds had seen since the $9.75 billion year-to-date deficit recorded the week ended Aug. 6, 2014.

Before their headlong plunge into negative territory seen during the last few 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 continued outflows

Another fund-tracking service, the Cambridge, Mass.-based EPFR Global, meanwhile saw a second straight sizable outflow from the high-yield funds in the latest week.

A market source pegged the cash loss “in excess of $700 million.”

The source had also seen an outflow last week “in excess of $600 million.”

It was a rare instance when the EPFR number was an outflow while AMG/Lipper was reporting an inflow, the first time the two services had reported opposite flows since the week ended May 3, when Lipper saw a $386 million outflow and EPFR calculated a $300 million inflow.

EPFR’s methodology differs from 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 Lipper’s solely domestic orientation.

The two services’ overall respective weekly results usually point pretty much in the same general direction in terms of a given week having an inflow or an outflow.

While sometimes they are actually quite close, those numbers can vary widely at other times because of the difference in their methodologies.

And occasionally, the two companies’ numbers may even diverge completely, as was the case this week.

Taking those differences into account, EPFR has now seen 16 inflows so far this year and 15 outflows, versus Lipper, which, as noted, has seen 15 cash gains and 16 cash losses.

IG corporates continue gains

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 33rd consecutive gain overall and their 31st straight net inflow this year, with no net outflows yet recorded for 2017.

The Lipper data indicated that the funds saw an inflow of $1.49 billion during the reporting week ended Wednesday.

The week before, ended July 26, had seen a $2.32 billion cash injection.

The latest inflow brought the year-to-date surge so far up to an estimated $78.39 billion this week – the peak 2017 cumulative inflow level so far, versus the $76.91 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.