Junk funds lose $639 million, breaking streak of inflows; IG funds see outflows

By Abigail W. Adams

Portland, Me., Sept. 6 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw their first outflow in six weeks with $639 million leaving the space in the week ended Sept. 5, according to fund-flow statistics generated by AMG Data Services Inc.

The outflow follows five consecutive weeks of inflows and kicks off September with cash leaving the space.

August marked the first month of the year where cash has continually entered the space.

High-yield mutual and exchange-traded funds saw inflows of $97 million for the week ended Aug. 29, $344 million for the week ended Aug. 22, $197 million for the week ended Aug. 15 and $828 million for the week ended Aug. 8.

Funds also rounded out July with an inflow of $37 million for the week ended Aug. 1.

While the streak of inflows whittled down the record level of outflows seen in 2018, this past week’s outflow of $639 million wiped out more than 40% of the inflows seen in August.

July saw mostly outflows with $548 million of cash departing in the week ended July 25 and $260 million in the week ended July 18.

The losses came after a sizable $1.85 billion gain during the week ending July 11. However, the sizable inflow was preceded by a sizable outflow of $1.73 billion during the week ended July 4.

The cumulative outflow for the year now totals $17.52 billion, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division.

For the past 10 weeks, the funds have seen six inflows and four outflows.

There have been 14 inflows and 22 outflows in the 36 weeks to date in 2018, according to the Prospect News analysis.

IG corporates see outflow

Among other asset classes, investment-grade corporate funds saw their first outflow in recent history with $297 million leaving the space for the week ended Sept. 5.

Investment-grade funds have seen healthy inflows for the past several weeks. Funds saw $2.253 billion enter the space in the week ended Aug. 29, $2.678 billion in the week ended Aug. 22, $1.453 billion in the week ended Aug. 15 and $2.804 billion in the week ended Aug. 8.

Funds also saw an inflow of $1.211 billion in the week ended Aug. 1 and an inflow of $1.986 billion in the week ended July 25.

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