Junk funds lose $2.043 billion in week, year’s third straight outflow

By Paul Deckelman

New York, Jan. 21 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – posted their third consecutive net outflow this week and their sixth downturn in the last seven weeks.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said on Thursday that $2.043 billion more left those weekly reporting-only domestic funds in the form of investor redemptions than had come into them during the week ended Wednesday.

That cash loss continued the negative trend seen last week, which saw a $2.107 billion net outflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Jan. 13.

That, in turn, followed an outflow of $809.1 million during the week ended Jan. 6.

Those outflows have stood in sharp contrast to the $114.1 million inflow that was recorded during the week ended Dec. 30.

The past three weeks’ outflows also marked a return to the recent negative pattern that the funds have seen, apart from that rare upturn. Before the Dec. 30 week’s inflow, the funds had suffered three consecutive weeks of outflows, totaling $8.543 billion.

The most recent of these was the $1.269 billion in net redemptions reported during the week ended Dec. 23.

Before that had come the two biggest net outflows of last 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.

This week’s outflow was the eighth in the last 10 weeks, dating back to the week ended Nov. 18, against just two inflows during that time.

Year-to-date outflow widens

With three reporting weeks in the books for 2016 – all of them showing outflows – the year-to-date net outflow figure grew this week to $4.959 billion from $2.916 billion last week.

In 2015, meanwhile, there had been 27 inflows and 25 outflows in that time, the Prospect News analysis showed, producing a net outflow for the year of $7.046 billion.

That was down slightly from the peak net outflow for the year of $7.161 billion reported during the week 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.

Corporates funds lose again

Looking at the fund flows for other asset classes, investment-grade corporate bond funds posted a net outflow of $442 million during the week ended Wednesday, according to Lipper.

It was the ninth consecutive retreat for the corporate funds, a losing streak dating back to the week ended Nov. 25.

The funds had seen a $740 million outflow last week, which had followed the $1.126 billion downturn during the Jan. 6 week with which they had started the new year.

The corporate funds had closed out 2015 during the week ended Dec. 30 with a $1.656 billion outflow.

The most recently reported net inflow to the funds was reported during the week ended Nov. 18, when $945 million more came into the funds than left them. That followed a modest $82.668 million inflow during the week ended Nov. 11.

The Nov. 18 inflow has been the only such cash addition seen during the last 10 weeks going back to that date, according to a Prospect News analysis of the data.

With three Thursday-to-Wednesday reporting weeks of the new year complete, the year-to-date outflow total for 2016 stands at $2.308 billion, up from last week’s $1.866 billion cumulative red ink total.

For 2015, when inflows were seen in 28 weeks, against 24 weeks of outflows, net inflows for the year totaled just $1.826 billion – a far cry from the robust $86.111 billion net inflow figure recorded during 2014.

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