U.S. Fund Flows: Equity Funds Get Back In The Game

By | March 14, 2016

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By Patrick Keon Thomson Reuters Lipper’s fund macro-groups (including both mutual funds and exchange-traded funds [ETFs]) took in over $13.2 billion of net new money during the fund-flows week ended Wednesday, March 9. All four of the fund macro-groups experienced positive net flows for the week; taxable bond funds were at the head of the table with net inflows of $5.8 billion, followed by equity funds (+$4.6 billion), money market funds (+$2.4 billion), and municipal bond funds (+$518 million). The positive flows into equity funds reversed a nine-week trend of investors pulling money out of the group. The equity markets continued their comeback during the week. After losing over 11.4% during the first six weeks of the year the S&P 500 Index recorded its fourth straight week of positive returns. The index gained back over 7.2% during this four-week timeframe, including this past week’s 0.1% appreciation. The market took strength during the week from a rally in oil prices. U.S. crude hit a three-month high ($38.51) during the week and experienced increases in seven of the last eight trading sessions. An increased demand for gas overpowered the record-high crude oil stockpiles to drive the price of oil higher. Another positive for the market was a strong jobs report as nonfarm payrolls grew by 242,000 jobs. The jobs report reinforced the belief that a recession was not in the cards for the near term and also opened the door to the possibility of more interest rate hikes by the Federal Reserve in 2016. The majority of the net inflows for taxable bond funds belonged to mutual funds (+$3.4 billion), while ETFs contributed $2.4 billion to the total. On the mutual fund side the largest net inflows belonged to funds in Lipper’s High Yield Funds classification (+$1.6 billion), while investment-grade debt categories Lipper Core Plus Bond Funds and Lipper Core Bond Funds took in $735 million and $657 million of net new money, respectively. The two largest individual net inflows for ETFs belonged to the iShares Core US Aggregate Bond (NYSEARCA: AGG ) (+$687 million) and the iShares JPMorgan USD Emerging Market Bond (NYSEARCA: EMB ) (+$528 million). ETFs (+$4.2 billion) accounted for the majority of the net inflows for equity funds for the week, while mutual funds pitched in $400 million of net new money. The largest net inflows among individual ETFs belonged to the iShares MSCI Emerging Markets (NYSEARCA: EEM ) (+$853 million) and the iShares Russell 2000 (NYSEARCA: IWM ) (+$535 million), while for mutual funds nondomestic equity funds had positive flows of $416 million and domestic equity funds suffered slight net outflows of $16 million. The week’s net inflows for municipal bond mutual funds (+$450 million) were the twenty-third consecutive weekly gains for the group. Funds in the Intermediate Muni Debt Funds (+$166 million) and General Muni Debt Funds (+$117 million) categories posted the largest net inflows for the week. The net inflows into money market funds (+$2.4 billion) marked the fourth consecutive week in which the group experienced positive flows. The group grew its coffers by over $13.3 billion during this four-week run. The largest contributors to this past week’s gains were Institutional U.S. Money Market Funds (+$7.5 billion) and Institutional U.S. Government Money Market Funds (+$2.8 billion), while Institutional U.S. Treasury Money Market Funds had net outflows of over $4.7 billion. Scalper1 News

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