Lipper Weekly U.S. Fund Flows: Funds Gain $6.1 Billion During Wild Week

By | June 27, 2015

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U.S. stocks were on a wild ride during the fund-flows week ended Wednesday, June 24, 2015. Initially, investors sent the NASDAQ and Russell 2000 to new record highs, cheering the perceived dovish tone set at the conclusion of the June Federal Open Market Committee policy meeting. While the indices hit those new records at the margin, the economic data showed a drop in weekly jobless claims, and the Philadelphia Fed’s manufacturing index beat analyst expectations. However, a combination of an impasse in the Greek debt talks along with a purported quadruple-witching day sent the Dow Jones Industrial Average to a triple-digit decline, with Treasuries rallying on the news as investors looked toward safe-haven plays. On Friday, June 19, the Shanghai Composite Index posted its worst week in more than seven years as investors bailed on some recently strong-performing Chinese start-ups during the week. Nonetheless, on Monday and Tuesday news of a potential agreement between Greece and its lenders sent the markets once again to new highs, helped along by news that sales of existing homes rose in May and that sales of new single-family homes hit their fastest pace since February 2008. The rally faded, however, on Wednesday when investors learned no resolution was reached between Greece and its international creditors. The DJIA once again witnessed a triple-digit decline, this time losing 178 points for the day and closing at 17,996.07. With a rally in bonds and on investors’ flight to safety, it wasn’t too surprising to see that for the first week in three investors were net purchasers of fund assets (including those of conventional funds and exchange-traded funds [ETFs]), injecting a net $6.1 billion for the week and padding the coffers of money market funds (+$3.8 billion) and taxable bond funds (+$3.4 billion). However, investors redeemed some $1.0 billion from equity funds and $0.1 billion from municipal bond funds. For the fifth consecutive week equity ETFs witnessed net inflows, taking in $1.1 billion. As a result of better-than-expected U.S. housing news, a possible glimmer of hope for Greece, and a tech rally during the week, authorized participants (APs) were net purchasers of domestic equity funds (but only to the tune of +$0.4 billion), injecting money into the group for a fourth consecutive week. Despite continued nervousness over Greece’s bailout talks, APs were net purchasers of nondomestic equity funds (+$0.6 billion), injecting net new money into the group for the twenty-second consecutive week. As might be expected with interest increasing in tech issues, iShares Russell 2000 ETF (NYSEARCA: IWM ) (+$2.3 billion) and PowerShares QQQ Trust 1 (NASDAQ: QQQ ) (+$0.8 billion) attracted the largest amount of net new money of all the individual ETFs. At the other end of the spectrum SPDR S&P 500 ETF (NYSEARCA: SPY ) (-$2.1 billion) experienced the largest net redemption, while Financial Select Sector SPDR ETF (NYSEARCA: XLF ) (+$0.5 billion) suffered the second largest redemption for the week. For the second consecutive week conventional fund (ex-ETF) investors were net redeemers of equity funds, withdrawing $2.1 billion from the group. Domestic equity funds, handing back $3.0 billion, witnessed their twenty-first straight week of net outflows, even though they posted their first week of plus-side returns (+0.48%) in five. Meanwhile, their nondomestic equity fund counterparts witnessed $0.9 billion of net inflows-attracting new money for the twelfth week in a row. On the domestic side investors lightened up on large-cap funds and equity income funds, redeeming a net $1.7 billion and $0.9 billion, respectively, for the week. On the nondomestic side global equity funds witnessed $0.6 billion of net inflows, while international equity funds took in only $0.3 billion. For the first week in three taxable bond funds (ex-ETFs) witnessed net inflows, taking in a little more than $1.2 billion. Balanced funds attracted the largest sum of new money, taking in a net $1.6 billion (for their seventh week in eight of net inflows), while flexible funds attracted a net $0.4 billion (for their twenty-second straight week of inflows). Corporate investment-grade debt funds (-$132 million) and corporate high-yield funds (-$0.7 billion) suffered net redemptions. Loan participation funds witnessed net outflows (-$151 million) for a fourth consecutive week, while they posted their third week of negative returns (this past week -0.01%). Municipal debt funds (ex-ETFs) witnessed their eighth straight week of net outflows, to the tune of $148 million for this past week. Scalper1 News

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