Junk funds in red for third week, losing $573 million of cash

New York, April 5 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – suffered another losing week as a further $573 million of cash exited in the seven-day period ending on April 4, according to fund-flow statistics generated by AMG Data Services Inc.

That outflow followed a loss of $619 million the previous week and $1.174 billion the week before that, as reported by the Arcata, Calif.-based unit of Thomson Reuters Corp’ s Lipper analytics division.

Ahead of those three outflows was a tiny inflow of $11 million.

But that positive number came after a long run of losses: $525 million in 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 11th in the 14 weeks since the start of the year, against just three inflows.

With that decline, the year-to-date cumulative cash loss is now $16.08 billion, widening from $15.51 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 solid $1.554 billion inflow for the week to April 4.

That came after a $0.438 billion inflow for the week to March 28, smaller than the $3.484 billion inflow of the previous week.

That gain, in turn, followed a $2.316 billion inflow which more than reversed the rare $740 million net outflow figure that preceded it.

There was also an outflow during the Feb. 14 week but otherwise it has been all cash additions, including a 21 week stretch before the Feb. 14 week that dated back to mid-September, according to a Prospect News analysis of the data.

The latest gain raises the year-to-date inflow for the IG corporates to $31.13 billion from $29.58 billion the previous week, setting a new peak level for the year so far.

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