Junk fund lose $1.17 billion on week, returning to negative trend

New York, March 22 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – returned to the red in the most recent week after barely making it into positive territory the previous week.

For the week ended Wednesday, March 21, the funds lost $1.174 billion of cash, according to sources familiar with the fund-flow statistics generated by AMG Data Services Inc.

The outflow for the weekly reporting-only domestic funds follows a gain of $11 million in the previous week, ended March 14, as reported by the Arcata, Calif.-based unit of Thomson Reuters Corp’ s Lipper analytics division.

Before that the funds had lost $525 million the week ended March 7, $703 million for the seven-day period ended Feb. 28, $335 million for the week ended Feb 21 – and a yawning $6.31 billion cash bleed for the week ended Feb. 14.

According to a Prospect News analysis of the data, that giant-sized outflow was not only by far the biggest cash drain seen so far this year, it was also the second-largest outflow on record since Lipper began tracking fund flows back in 1992, exceeded only by the record $7.07 billion that the funds lost during the week ended Aug. 6, 2014.

The most recent outflow is the ninth negative flow in the past 10 weeks.

Recent trend is negative

According to the Prospect News analysis, this week’s loss was the ninth in the 12 weeks since the start of the year, against just three inflows.

The most recent report expands the cumulative net cash loss to $14.89 billion from $13.72 billion the week before.

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 gain

Looking at fund flows for other asset classes during the week, investment-grade corporate funds saw a substantial $3.484 billion inflow for the week to March 21, up from the $2.316 billion inflow of the previous week.

The earlier inflow had in turn more than reversed the $740 million net outflow figure that preceded it.

That outflow was the second seen in the last six weeks by the corporate funds, a relative rarity.

The previous week the funds gained $1.37 billion and they saw a $1.57 billion inflow during the Feb. 21 week, which had followed a $790 million cash loss during the Feb. 14 week. That outflow had been the first downturn after 21 straight weeks of gains dating back to mid-September, according to a Prospect News analysis of the data.

This week’s funds gain raises the year-to-date net inflow figure for the IG corporates to $26.10 billion from last week’s $22.62 billion, setting a new peak level for the year so far.

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