Junk funds lose $2.19 billion this week, first net outflow since July 26

By Paul Deckelman

New York, Aug. 17 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – fell sharply this week, according to numbers released on Thursday.

It was the first net outflow the funds have seen since the week ended July 26.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that some $2.19 billion more left those weekly reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday, Aug. 16.

That big outflow follows two net inflows totaling $319 million – a $124 million cash gain reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Aug. 9 and before that, a $195 million inflow for the week ended Aug. 2.

Those two inflows contrasted with the $21 million net outflow seen the week of July 26, which had followed a $2.22 billion inflow for the funds during the week ended July 19.

Year-to-date outflow widens

According to a Prospect News analysis of the data, this week’s outflow was the 17th seen so far this year, versus 16 inflows during that time.

It was the sixth cash loss seen in the last 10 weeks, dating back to the week ended June 14, versus four cash gains seen during that time.

Besides this week’s outflow and the other inflows and outflows already noted, that 10-week stretch also included four consecutive weeks of net outflows totaling some $4.16 billion – a $1.14 billion outflow for the week ended July 12, and before that, outflows of $1.16 billion seen during the week ended July 5, of $1.74 billion during the week ended June 28, and a $128 million outflow during the week ended June 21.

Those four outflows had, in turn, followed three straight weeks of net inflows totaling about $1.31 billion, including a $198 million inflow for the week ended June 14.

This week’s outflow widened the estimated year-to-date net outflow number to some $8.54 billion from last week’s $6.35 billion.

That remained less than the $8.87 billion cumulative outflow total posted during the July 12 week, which was the 2017 net outflow wide point as well as the biggest cumulative net outflow number the junk funds had seen since the $9.75 billion year-to-date deficit recorded the week ended Aug. 6, 2014.

Before their headlong plunge into negative territory seen during the last few months, the flows had shown a relatively strong start to the year.

They had posted six inflows during the first 10 reporting weeks of the year, reaching a peak cumulative net inflow total of $1.62 billion during the week ended Feb. 22.

They were still in positive territory for the year-to-date during the week ended March 1, with a $1.38 billion net inflow, before falling into the red the following week and staying there after that.

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.

IG corporates continue gains

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 35th consecutive gain overall and their 33rd straight net inflow this year, with no net outflows yet recorded for 2017.

The Lipper data indicated that the funds saw an inflow of $2.43 billion during the reporting week ended Wednesday.

The week before, ended Aug. 9, had seen a nearly identically sized $2.46 billion cash injection.

The latest inflow brought the year-to-date surge so far up to an estimated $83.28 billion this week – the peak 2017 cumulative inflow level so far, versus the $80.85 billion seen last week, the previous high point for the year.

© 2015 Prospect News.
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