Junk funds see $1.905 billion outflow, second loss after four inflows

By Paul Deckelman

New York, May 12 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – posted their second large net outflow in as many weeks, market sources said Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that some $1.905 billion more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday.

That followed the $1.807 billion outflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended May 4 – a downturn that broke a string of four consecutive weeks during which more cash had come into those funds than flowed out of them, according to a Prospect News analysis of the figures.

Those two outflows, totaling $3.712 billion, followed four consecutive inflows totaling nearly $1.972 billion – a $296.3 million inflow during the week ended April 27, the most recent inflow recorded, and before that inflows of $1.181 billion during the week ended April 6, $84.6 million during the week ended April 13 and $409.9 million during the week ended April 20.

The latest week’s outflow was the eighth cash loss since the start of the year, versus 11 inflows in that time.

Year-to-date inflow reduced

With 19 reporting weeks now in the books for 2016, the year-to-date net inflow figure fell to $5.952 billion, the Prospect News analysis indicated, down from $7.857 billion last week, and down as well from the peak of $9.664 billion during the April 27 week.

The fund flows – which started the year off with a string of outflows – reached their peak net outflow level for the year during the week ended Feb. 10, when they showed cumulative red ink of $5.165 billion.

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.

Corporates, loan funds see inflows

Looking at fund flows for other asset classes, investment-grade corporate funds saw a net inflow this week of $1.129 billion, the Lipper data indicated, bringing its year-to-date net inflow up to $9.011 billion.

That was up from the $7.883 billion cumulative inflow seen last week, when the inflow for the week was $2.098 billion

Leveraged loan participation funds – which have mostly seen outflows so far this year – saw a $302.8 million inflow on the week, following last week’s $84.2 million cash gain.

The latest inflow cut the loan funds’ year-to-date net outflow to $4.972 billion, the data indicated, down from $5.275 billion last week.

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