Junk funds up $342 million in week, second upturn after six outflows

By Paul Deckelman

New York, Dec. 1 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – posted a second consecutive week of net inflows this week, the pair of gains breaking a string of six straight net outflows.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said Monday that $342 million more came into the weekly-reporting-only domestic funds than left them via investor redemptions during the week ended Wednesday.

That cash addition followed the $598 million inflow reported last Friday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Nov. 23.

Although the fund flow numbers customarily circulate around the junk bond market every Thursday afternoon, the market was shut last Thursday in observance of the Thanksgiving Day holiday in the United States. Instead the numbers came out last Friday, although not many market participants were around to see them, with Junkbondland seeing a sparsely populated, lightly traded session.

The two weeks of inflows, totaling some $940 million, stood in stark contrast to the $2.284 billion outflow posted during the week ended Nov. 16 – the most recent of six consecutive weekly cash declines totaling $7.349 billion.

Those outflows also included the $669 million cash loss seen during the week ended Nov. 9 and before that, in the week ended Nov. 2, a gaping $4.116 billion loss – easily the largest outflow so far this year and the third largest on record, according to a Prospect News analysis of the data.

It surpassed the previous biggest 2016 outflow of $2.464 billion, seen during the week ended Aug. 3, and in the period since AMG/Lipper began tracking fund flow movements in 1992 it has been exceeded only by the whopping $7.068 billion that the funds lost during the week ended Aug. 6, 2014 – the biggest outflow ever – and by the $4.63 billion withdrawn during the week ended June 5, 2013.

According to the Prospect News data analysis, this week’s inflow was just the fourth gain in the last 10 weeks, dating back to the week ended Sept. 28.

On a longer-term basis, this week’s inflow was the 25th so far this year, versus 23 outflows.

Year-to-date inflow rises

With 48 reporting weeks now in the books for 2016, the year-to-date cumulative net inflow rose this week to $4.766 billion from $4.424 billion during the Nov. 23 week, the data showed, although those levels still remained well down from the $11.175 billion recorded during the Oct. 5 week.

That latter figure had established a new peak cumulative net inflow for the year so far, surpassing the former high-water mark of $9.982 billion set during the week ended Sept. 7.

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.

IG corporates head south

Looking at fund flows for other asset classes this week, while the junk bond funds sizzled, investment-grade corporate funds fizzled, their first lost after three straight weeks in positive territory.

The Lipper data indicated that the funds saw net outflows of $1.302 billion in the week ended Wednesday, versus net inflows of $1.559 billion last week, which came on top of cash gains of $469.99 million in the week ended Nov. 16 and $676 million in the Nov. 9 week.

Those three inflows had contrasted sharply with the $2.495 billion outflow seen during the week ended Nov. 2.

This week’s outflow dropped the funds’ year-to-date net inflow to $41.699 billion from last week’s $43.001 billion total – the peak cumulative inflow figure for the year so far, according to Prospect News’ analysis of the data.

© 2015 Prospect News.
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