Junk funds gain $324 million, continuing back and forth pattern

New York, June 14 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – attracted $324 million of cash in the week to June 13, according to fund-flow statistics generated by AMG Data Services Inc.

The inflow came after a large $2.420 billion outflow the previous week and continued the recent mixed trend of gains and losses, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

The week before last week’s big drain of cash, there had been a tiny $18 million withdrawal of cash.

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.

The latest inflow trims the year-to-date cumulative figure to negative $17.30 billion, a little narrower than the $17.52 billion the previous week, which was a low point for the year so far.

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

In total this year has seen eight inflows and 16 outflows in the 24 weeks so far, according to the Prospect News analysis.

IG corporates add cash

Among other asset classes, investment-grade corporate funds experienced a solid $2.038 billion inflow for the week.

That was up markedly from $1.325 billion the previous week and 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 $49.65 billion from $47.61 billion the week before, setting another new peak for the year so far.

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