Volatile Trading Week Produces Somewhat Muted U.S. Fund Flows

By | September 4, 2015

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For the fund-flows week ended Wednesday, September 2 the U.S. equity markets experienced a roller coaster ride. The Dow Jones Industrial Average experienced four triple digit move days (two up and two down) to close the week with a gain of 0.4%. This volatility was spurred on by the continued fears about the economic slow-down in China (the down days) counter balanced by strong U.S. economic data (sharply revised upwards second quarter GDP numbers) and a bounce in oil prices. Underscoring the increased volatility in the market was the increase in the CBOE Volatility Index (VIX) which spiked at greater than 30. Any value above 20 for the VIX is a warning sign to investors that the market is ripe for wide shifts in momentum. This week’s fund flow results did not reflect the up and down nature of the trading as most of the data produced was a continuation of current trends. Breaking down this week’s fund flows information by macro groups (equity funds, taxable bond funds, municipal bonds and money market funds) and by fund type (mutual funds and ETFs) we saw that all of the mutual funds groups experienced net outflows. Taxable bond mutual funds (-$4.3 billion) suffered through their sixth straight week of negative flows. Within the taxable bond fund group investors took money out of Lipper’s High Yield Funds (-$714 million) and Loan Participation Funds (-$451 million) in what can be viewed as fight to safety in this time of uncertainty. Municipal bond mutual funds and equity mutual funds also extended their recent losing streaks with their second and third consecutive weeks of net outflows, respectively. Contradicting the other groups, money market funds did reverse their current trend with outflows of over $10 billion after four consecutive weeks of net inflows which totaled almost $50 billion. There was some positive news within the ETF universe as equity ETFs (+$4.8 billion) and taxable bond ETFs (+$4.3 billion) both were the beneficiaries of sizeable net inflows. For equity ETFs it was third net inflow in four weeks as SPDR S&P 500 ETF Trust (NYSEARCA: SPY ) paced the field by taking in $7.2 billion of net new money. The inflows into taxable bond ETFs marked their third consecutive week of positive results with almost $7.3 billion net inflows during the time period. (click to enlarge) Share this article with a colleague Scalper1 News

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