Junk bond mutual funds, ETFs see $40.9 million outflow in latest week

By Paul Deckelman

New York, Feb. 4 – High-yield mutual funds and exchange-traded funds resumed their mostly negative trend for the year so far, posting a small outflow in the latest week. It was their fourth such downturn in the five weeks since the start of the new year.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said on Thursday that $40.9 million 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 stood in contrast to the $883.3 million net inflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Jan. 27.

That inflow was the first, and so far the only, cash addition seen in 2016.

It followed sizable outflows totaling $4.96 billion that were recorded during the first three weeks of the new year.

This week’s outflow was the seventh seen in the last 10 weeks dating back to the week ended Dec. 2, against three inflows during that time, according to a Prospect News analysis of the figures.

Year-to-date outflow widens

With five reporting weeks in the books for 2016 – four of them outflows against last week’s inflow, as noted – the year-to-date net outflow figure rose to $4.12 billion from $4.08 billion last week.

Those levels were still down from the $4.96 billion of red ink seen during the Jan. 20 week, the peak cumulative net outflow level for 2016 so far.

In 2015, meanwhile, there were 27 inflows and 25 outflows, the Prospect News analysis showed, producing a net outflow for the year of $7.05 billion.

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 $1.45 billion during the week ended Wednesday, according to Lipper.

It was the 11th consecutive retreat for the corporate funds, a losing streak dating back to the week ended Nov. 25.

The funds had seen a $1.19 billion outflow last week, which had followed a $442 million outflow in the Jan. 20 week, a $740 million cash loss during the Jan. 13 week and a $1.13 billion downturn during the Jan. 6 week with which they had started the new year.

With five Thursday-to-Wednesday reporting weeks of the new year complete, the year-to-date outflow total for 2016 rose to $4.95 billion, its peak level for the year so far, from $3.46 billion last week, the previous peak cumulative red ink total.

The corporate funds had closed out 2015 during the week ended Dec. 30 with a $1.66 billion outflow.

For 2015, when inflows were seen in 28 weeks against 24 weeks of outflows, net inflows for the year totaled just $1.83 billion, according to a Prospect News analysis of the figures – a far cry from the robust $86.11 billion net inflow figure recorded during 2014.

Loan funds’ slide continues

Meanwhile, leveraged loan participation funds, which struggled all of the last two years, remained under pressure as the second month of the new year began, according to the latest Lipper data.

Some $405 million more left those funds than came into them during the week ended Wednesday.

It was the loan funds’ fifth consecutive outflow so far in 2016, versus no inflows in that time.

The losing streak includes outflows of $783.7 million last week, $743 million during the week ended Jan. 20, $402.2 million during the week ended Jan. 13 and $560.1 million during the week ended Jan. 6.

The latest week’s outflow brings the year-to-date net outflow total to $2.89 billion, the peak cumulative loss for the year so far, having widened from the previous peak level of $2.49 billion last week, according to a Prospect News analysis of the data.

On a longer-tem basis, the latest outflow was the loan funds’ 28th consecutive downturn, according to the analysis.

In 2015, the funds racked up a net outflow total of $16.41 billion.

© 2015 Prospect News.
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