Junk funds add $2.49 billion, reversing most of previous week’s gain

New York, April 26 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – lost $2.489 billion of cash in the week to April 25, according to fund-flow statistics generated by AMG Data Services Inc.

The outflow reversed a large part of the $2.971 billion inflow recorded the previous week, ended April 18, as reported by the Arcata, Calif.-based unit of Thomson Reuters Corp’ s Lipper analytics division.

The week before that had seen a gain of $989 million, ending a three-week run of losses.

Those three weeks of red ink – $573 million, $619 million and $1.174 billion – had come after a tiny $11 million gain in the week to March 14 which in turn had come after a substantial period of outflows including the 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.

With the latest outflow, the funds have now seen three gains and seven outflows in the past 10 weeks.

Year-to-date more negative

The cumulative year-to-date figure for high-yield fund flows is now a $14.61 billion deficit, widened from $12.12 billion the week before but still above the low point for the year of $16.08 billion recorded in the week ended April 4.

In total this year has seen five inflows and 12 outflows in the 17 weeks so far, according to the Prospect News analysis.

IG corporates in the green

Among other asset classes, investment-grade corporate funds yet again saw an inflow, this time for $2.010 billion.

That followed a gain of $1.535 billion the previous week and $3.346 billion the week before that.

The IG funds have now seen seven straight inflows.

Apart from the Feb. 14 and Feb. 21 weeks, every week so far this year has seen positive flows and in fact before those two weeks in February investment-grade corporates saw a 21-week run of inflows dating 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 $38.03 billion from $36.02 billion, once again setting a new peak level for the year so far.

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