Junk funds gain $114 million in week, breaking three-week skid, but end year down $7 billion

By Paul Deckelman

New York, Dec. 31 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – finished off the year on a positive note, breaking a three-week losing streak.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said on Thursday that $114 million more came into those weekly reporting-only domestic funds in the form of investor contributions than had left them during the week ended Wednesday.

That followed three consecutive weeks of outflows, totaling $8.543 billion, which had been reported by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division.

The most recent of these was the $1.269 billion in net redemptions that had been reported last Thursday for the week ended Dec. 23.

Before that had come the two biggest net outflows of the year, according to a Prospect News analysis of the figures – the $3.811 billion cash hemorrhage seen for the week ended Dec. 16, which had followed and surpassed the $3.463 billion cash bleed seen in the week before that, ended Dec. 9.

The latter two outflows were, respectively, also the third and fourth largest net outflows on record at AMG/Lipper, which has been watching fund flows since 1992, the analysis indicated, exceeded only by the record $7.068 billion cash plunge posted during the week ended Aug. 6, 2014 and the $4.63 billion outflow seen during the week ended June 5, 2013.

This week’s inflow was the first seen since the week ended Dec. 2, when $397.6 million more came into the funds than left them.

It was only the second inflow seen in the last eight weeks; before the Dec. 2 inflow number, Lipper had reported three more outflow numbers totaling $3.658 billion – a $501.147 million outflow during the week ended Nov. 25, a $1.357 billion outflow during the week ended Nov. 18 and a $1.8 billion outflow during the week ended Nov. 11.

There had also been two other inflows during the last 10 weeks, dating back to the week ended Oct. 28, $2.048 billion during the week ended Nov. 4 and $2.035 billion during the Oct. 28 week. They brought the inflow total to four in that time period, against the six outflows already noted.

$7 billion outflow for year

On a longer-term basis, with all 52 weeks in the books for 2015, there had been 27 inflows and 25 outflows in that time, the Prospect News analysis showed.

This week’s small inflow slightly cut the year’s net outflow to $7.047 billion from the previous week’s cumulative deficit of $7.161 billion, which was the peak net outflow total this year.

Reflecting the fund flows’ strength earlier in the year, the peak cumulative inflow for 2015 was the $11.476 billion recorded during the week ended April 15, the analysis indicated.

Reflecting the erosion of the fund flows’ strength later on in the year, the cumulative fund flows number slid back into the red in early August for the first time since early January and stayed there for more than two months. The funds did not get back into the black until the Oct. 21 week, and stayed there for the rest of that month, through November and on into early December.

The big outflow seen during the Dec. 9 week had pushed fund flow totals back into the red.

That had been the first time the year-to-date figure had been back in the red since the week ended Oct. 14.

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.

In 2014, inflows had been seen in 31 of the year’s weeks, versus 21 weekly outflows – but the year ended with a $6.266 billion net outflow.

Corporates funds lose again

Looking at the fund flows for other asset classes, investment-grade corporate bond funds posted a net outflow of $1.656 billion during the week ended Wednesday, according to Lipper.

It was the sixth consecutive retreat for the corporate funds, following last week’s $3.231 billion outflow, as well as the $5.12 billion cash plunge seen during the week ended Dec. 16 – the biggest outflow from the corporates seen this year and one of the biggest downturns ever.

That giant-sized cash loss, in turn, had followed outflows of $1.55 billion during the Dec. 9 week, $546.7 million during the Dec. 2 week and $1.459 billion during the week ended Nov. 25. The last inflow for the year was seen during the week ended Nov. 18, when $945 million more came into the funds than left them.

The latest week’s outflow was the seventh in the last 10 weeks going back to Oct. 28, matched against just three inflows in that time, according to a Prospect News analysis of the data.

For the year, inflows were seen in 28 weeks, against 24 weeks of outflows.

The net inflow number for the year shrank this week to $1.825 billion from $3.481 billion the previous week.

© 2015 Prospect News.
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