Junk funds see hefty $2.42 billion outflow, sink to new low for year

New York, June 7 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw a substantial outflow of $2.420 billion in the week to June 6, according to fund-flow statistics generated by AMG Data Services Inc.

The loss took the year-to-date cumulative flow of cash to negative $17.52 billion, down from negative $15.10 billion the previous week and a new trough for 2018, below the previous low point of $16.08 billion recorded in the week ended April 4, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

The latest outflow follows an insignificant $18 million withdrawal of cash the previous week.

Before that the statistics had been up and down.

In the week to May 23, the funds had added $261 million of cash but there were outflows of $0.542 billion and $0.755 billion in the preceding weeks and those followed a gain of $0.526 billion in the week ending May 2 and suffering a large $2.489 billion loss the week before that and an even larger $2.971 billion inflow in the April 18 week.

The April 11 week saw a gain of $989 million which ended three weeks of losses – of $573 million, $619 million and $1.174 billion – which in turn succeeded a minuscule $11 million gain in the week to March 14.

Before that there had been 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 four inflows and six outflows in the past 10 weeks.

In total this year has seen seven inflows and 16 outflows in the 23 weeks so far, according to the Prospect News analysis.

IG corporates see inflow

Among other asset classes, investment-grade corporate funds experienced a respectable inflow of $1.325 billion for the week.

That came after inflows of $0.849 billion, $2.529 billion, $3.069 billion, $0.804 billion and $0.997 billion in the preceding weeks.

The IG funds continue to have seen 10 inflows in the last 10 weeks.

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 addition of funds raises the year-to-date inflow for the IG corporates to $47.61 billion from $46.28 billion the week prior, setting another new peak for the year so far.

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