Junk funds gain $158 million in week, third rise after two-week skid

By Paul Deckelman

New York, Feb. 16 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – were in positive territory for a third consecutive week after two straight outflows, according to data released on Thursday.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $158 million more came into those weekly reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday.

That net inflow followed the $442 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 Feb. 8 and, before that, the $413 million cash addition during the week ended Feb. 1.

Those three inflows, totaling $1.013 billion, represented a rebound from the two weeks of outflows totaling $1.419 billion which preceded them. Those losses included $532 million during the week ended Jan. 25 and $887 million during the week ended January 18.

The new year had begun with a pair inflows totaling $1.298 billion, part of an overall three-week run of consecutive cash gains totaling $1.890 billion that also included the $592 million inflow recorded in the week ended Dec. 28, the last full reporting week of 2016.

Year-to-date inflows rise

According to a Prospect News analysis of the data, this week’s inflow – the fifth so far this year, against two outflows – was the seventh gain in the last 10 weeks dating back to the week ended Dec. 14, versus three outflows during that stretch.

It raised the year-to-date net inflow total to $892 million from $734 million last week, although the year-to-date total remained down from its peak level for 2017 so far – the $1.298 billion cumulative net inflow seen during the week ended Jan. 11.

The cumulative flow numbers have been recovering over the past three weeks from the $121 million year-to-date outflow recorded during the week ended Jan. 25, the only week so far that the year-to-date total has dipped into the red.

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.

EPFR records fourth gain

Another fund-tracking service, the Cambridge, Mass.-based EPFR Global, meanwhile saw a net inflow “close to $1 billion,” according to a market source.

It was the fourth consecutive large inflow recorded by EPFR. Last week, the source said the cash gain had been “more like $2 billion.”

That came on the heels of an inflow “in excess of $2 billion,” during the week ended Feb. 1 and “north of $1.5 billion,” during the week ended Jan. 25 – even though AMG/Lipper had reported an outflow that week, as noted.

EPFR’s methodology differs from AMG/Lipper’s as its fund universe includes many mutual funds and ETFs domiciled outside the United States, such as strictly European junk funds and broader global funds, versus AMG/Lipper’s solely domestic orientation.

Because of that difference, while the two services’ respective weekly results frequently point pretty much in the same direction, as they did this week, their actual numbers may sometimes vary widely – for instance, EPFR’s inflow of nearly $1 billion this week and in the $2 billion area the previous two weeks while AMG/Lipper was reporting considerably smaller inflows in each of those weeks, or during the week ended Jan. 11, when EPFR had reported an inflow that the market source called “roughly double” the size of the corresponding AMG/Lipper figure.

Occasionally, the numbers may diverge completely, with one service reporting an inflow in a given week while the other sees an outflow, as was most recently the case during the Jan. 25 week.

Taking those differences into account, EPFR has now seen six inflows so far this year and one outflow, versus AMG/Lipper’s five cash gains and two cash losses.

IG corporates continue surge

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their ninth consecutive gain and their seventh straight inflow seen so far this year, with no outflows yet recorded for 2017.

The Lipper data indicated that the funds saw net inflows of $3.054 billion this week.

That followed the $4.932 billion inflow seen last week – not only the biggest inflow to those funds seen this year, surpassing the $4.029 billion net gain seen during the week ended Jan. 11, but the largest cash addition the corporate funds have seen in more than two years, since October of 2014.

That brought the year-to-date surge so far up to an estimated $20.341 billion this week – the peak 2017 cumulative inflow level so far, versus $17.287 billion last week, the previous high point.

© 2015 Prospect News.
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