Junk funds lose $922 million in latest week, follows two inflows

By Paul Deckelman

New York, Dec. 14 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – turned decidedly negative this week after posting gains over the two previous weeks, according to the most recently released numbers.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $922 million more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday, Dec. 13.

It was the first outflow following a pair of inflows totaling $527 million, including the $217 million cash gain reported by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Dec. 6.

Before that had come a $310 million gain during the week ended Nov. 29, which had been the first cash addition after four consecutive weeks of outflows before that totaling $6.47 billion.

That losing streak included outflows of $209 million during the week ended Nov. 22 and an enormous $4.44 billion cash loss during the week ended Nov. 15 – the second-biggest outflow this year, according to a Prospect News analysis of the data, surpassed only by the $5.68 billion cash hemorrhage seen during the week ended March 15. The Nov. 15 outflow was also the fourth biggest ever recorded since AMG/Lipper began tracking fund flows back in 1992.

Year-to-date outflow widens

According to the Prospect News analysis, this week’s outflow was the 26th so far this year, versus 24 inflows.

It was the sixth cash loss in the last 10 weeks, dating back to the week ended Oct. 11, versus four cash gains during that time.

This week’s outflow widened the year-to-date net outflow number to $13.85 billion from last week’s $12.93 billion, according to the analysis.

This week’s total also established a new widest year-to-date net outflow figure for 2017 so far, surpassing the previous wide point of a $13.46 billion cumulative net outflow recorded during the Nov. 22 week.

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 outflows continuing

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, meanwhile saw its seventh straight net outflow this week, with the amount of money leaving the junk funds rather than coming into them pegged at $2.37 billion, according to a market source.

That followed the roughly $1.65 billion outflow that the source had seen last week and the $535 million shortfall during the Nov. 29 week.

Besides those outflows, EPFR had also seen four straight outflows before that as well – a more than $2.2 billion outflow during the Nov. 22 week, a cash loss “in excess of $6 billion” during the Nov. 15 week, as well as outflows of $645 million during the Nov. 8 week and $345 million during the Nov. 1 week, the source said.

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 – but not always—point pretty much in the same general direction in terms of a given week having an inflow or an outflow, according to a Prospect News analysis of the data.

Sometimes their numbers track fairly closely, as happened to be the case during the Nov. 8 and Nov. 15 weeks, while other times, they may differ widely, such as this week, when EPFR reported an outflow more than twice the size of the one seen by Lipper.

And occasionally, the two companies’ numbers may even diverge completely, as happened last week and during the Nov 29 week, with EPFR recording additional outflows both weeks while Lipper saw a pair of modest inflows breaking a losing streak, as noted.

Taking those differences into account, EPFR has now seen 25 inflows so far this year and 25 outflows, versus Lipper, which, as noted, has seen 24 cash gains and 26 cash losses in the 50 weeks since the start of the year.

IG corporates extend gains

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 13th consecutive weekly gain following two rare weekly losses.

The Lipper calculations indicated that the funds saw a net inflow of $755 million during the reporting week ended Wednesday, on the heels of a $622 million upturn seen last week.

This week’s inflow raised the year-to-date net inflow figure to an estimated $115.77 billion from last week’s $115.01 billion, establishing a 12th consecutive new 2017 cumulative peak level, the Prospect News analysis of the data indicated.

© 2015 Prospect News.
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