Junk funds see $1.14 billion inflow, breaking two-week losing streak

By Paul Deckelman

New York, May 19 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – turned positive this week, after having suffered two straight weeks of large outflows before that, market sources said Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $1.14 billion more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday.

That was a profound improvement from the $1.91 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 11, which had followed a $1.81 billion outflow for the week ended May 4.

Those two weeks of downturns, totaling $3.71 billion, had in turn broken a string of four consecutive weeks of inflows totaling nearly $1.97 billion between the week ended April 6 and the week ended April 27.

They had also put an end to a longer stretch of 10 weeks out of the prior 11during which more cash had come into those funds than flowed out of them, according to a Prospect News analysis of the figures.

The latest week’s inflow was the 12th such cash gain since the start of the year, versus eight outflows in that time.

Year-to-date inflow grows

With 20 reporting weeks now in the books for 2016, the year-to-date net inflow rose to $7.09 billion, according to Lipper. That was up from $5.95 billion last week but still well down from $9.66 billion during the April 27 week, which had been the fourth consecutive new peak level for the year so far, according to the analysis.

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 $5.17 billion.

For all of 2015, meanwhile, there had been 28 inflows and 24 outflows in that time, the analysis showed, producing a net outflow for the year of $7.05 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.

Corporate funds rise

Looking at fund flows for other asset classes, investment-grade corporate funds saw a net inflow this week of $1.15 billion, the Lipper data indicated, bringing their year-to-date net inflow up to $11.28 billion.

That was up from the $9.01 billion cumulative inflow seen last week, when the inflow for the week was $1.13 billion

On the other hand, leveraged loan participation funds – which have mostly seen outflows so far this year – saw a $138.8 million downturn on the week, versus last week’s $302.8 million cash gain.

The latest outflow raised the loan funds’ year-to-date net cash loss to $5.11 billion, the data indicated, versus $4.97 billion last week.

© 2015 Prospect News.
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