Junk funds see $84.6 million inflow for week, second straight gain

By Paul Deckelman

New York, April 14 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – posted their second consecutive net inflow this week, after having seen a net outflow two weeks ago.

This week was also the eighth week in the last nine during which more cash came into those funds than flowed out of them.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said on Thursday that some $84.6 million more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday.

This week’s inflow was considerably smaller than the $1.181 billion 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 April 6.

Those two inflows, totaling nearly $1.266 billion, followed the $545 million net outflow recorded for the week ended March 30, which was the first loss after six consecutive weeks of inflows, five of them of considerable size, topping the $1.5 billion mark, while several were even more than $2 billion.

During that six-week winning streak – lasting from the week ended Feb. 23 through the week ended March 23 – inflows totaled $13.404 billion, according to a Prospect News analysis of the figures.

One of those inflows had been the mammoth $4.967 billion cash injection during the week ended March 2 – which was not only the largest funds gain seen so far this year, easily surpassing the previous mark of $2.74 billion seen the week before that, ended Feb. 24, but was also the single largest inflow ever recorded since AMG/Lipper began tracking fund flows back in 1992. It thus surpassed the previous record-holder – the $4.25 billion inflow seen during the week ended Oct. 26, 2011.

The latest week’s inflow was the ninth gain in the 15 weeks since the start of the year, versus six outflows.

Year-to-date inflow swells

With 15 reporting weeks now in the books for 2016, the year-to-date net inflow figure rose to $8.958 billion, the Prospect News analysis indicated, a second consecutive new peak level for the year so far. The total was up from $8.873 billion last week, the previous zenith.

The fund flows – which started the year off with a string of outflows – reached their peak net outflow level for the year on Feb. 10, when they showed cumulative red ink of $5.165 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.

Corporate funds extend gains

Looking at fund flows for other asset classes, investment-grade corporate bond funds stayed on the positive side of the ledger this week, notching their sixth straight inflow.

Those investment-grade funds saw a net gain of $824.4 million during the reporting week, following on the heels of the $1.02 billion cash addition seen last week.

During that six-week winning streak – with net inflows totaling $7.462 billion in that time, according to a Prospect News analysis of the data – the largest single cash injection was $2.176 billion during the week ended March 9.

The most recent outflow from the funds was been in the week ended March 2, when they had declined by $761.406 million.

With 15 Thursday-to-Wednesday reporting weeks of the year complete, there have now been eight inflows and seven outflows, the largest being the $1.451 billion outflow reported during the week ended Feb. 3.

This week’s inflow brought the IG corporates cumulative inflow total up to $1.325 billion, according to the Lipper figures.

The fund-flow totals had moved into the black last week for the first time this year, after having been in negative territory over the previous 13 weeks

Loan funds continue on the slide

Meanwhile, leveraged loan participation funds, which struggled all of the last two years and which have remained under pressure for most of this year, saw their third consecutive weekly downturn, after three straight weeks during which they had shown net inflows.

That three-week surge, in turn, had followed 32 consecutive weeks of losses, according to the latest Lipper data.

Some $72.7 million more left those funds in the form of investor redemptions than came into them during the week ended Wednesday.

That followed outflows of $332 million the previous week and $119 million during the week ended March 30

The most recent inflow was the $126.155 million cash injection seen during the week ended March 23, which followed the $176.1 million net gain the funds saw during the week ended March 16 and $55 million of inflows the week before that, ended March 9.

Before that had come the elongated 32-week losing streak, dating back to the week ended last July 29.

Those three modest weekly inflows were the only ones seen so far this year, versus the nine straight outflows that opened the year, plus the outflows seen over the past three weeks, bringing the year’s tally to 12 outflows.

The latest week’s outflow raises the year-to-date net outflow total to $5.191 billion, a second consecutive new peak from $5.118 billion last week, the previous peak cumulative loss for the year so far, according to a Prospect News analysis of the data.

© 2015 Prospect News.
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