Junk funds jump $3.75 billion in latest week, fourth straight upturn

By Paul Deckelman

New York, Dec. 15 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – posted a fourth consecutive week of net inflows this week, after having broken a string of six straight net outflows before that.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said Thursday that $3.75 billion more came into the weekly-reporting-only domestic funds than left them via investor redemptions during the week ended Wednesday.

That big cash addition followed the $2.034 billion inflow reported the previous Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended Dec. 7.

Those two inflows, in turn, followed cash gains of $342 million during the week ended Nov. 30 and $598 million for the week ended Nov. 23.

The four weeks of inflows, totaling $6.724 billion, 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 included the $4.116 billion loss in the week ended Nov. 2 – easily the largest outflow seen so far this year and the third-largest on record, according to a Prospect News analysis of the data.

According to the Prospect News data analysis, this week’s inflow was the fourth gain in the last 10 weeks, dating back to the week ended Oct. 12.

On a longer-term basis, this week’s inflow was the 27th this year versus 23 outflows.

One of the biggest inflows ever

According to the Prospect News data, this week’s $3.75 billion net inflow was one of the biggest that AMG/Lipper has ever seen, ranking fourth on the all-time list.

It was exceeded only by the $4.25 billion inflow seen during the week ended Oct. 26, 2011, the third-biggest inflow; the $4.351 billion cash gain seen during the week ended July 13 of this year, the second-biggest; and the $4.967 billion inflow also set earlier this year, in the week ended March 2, currently in the books as the all-time biggest inflow.

This week’s inflow thus bumps the $3.43 billion cash gain recorded during the week ended Oct. 21, 2015, the former Number-Four inflow, down to fifth place on the all-time list.

Year-to-date inflow rises

With 50 reporting weeks now in the books for 2016, the year-to-date cumulative net inflow rose this week to $10.55 billion from $6.8 billion during the Dec. 7 week, the data showed, although those levels still remained down from the $11.175 billion recorded during the Oct. 5 week.

That latter figure 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 stumble

Looking at fund flows for other asset classes this week, investment-grade corporate funds turned lower this week in contrast to the solidly positive gain seen last week.

It was the second loss in the last three weeks, which followed three weeks in positive territory.

The Lipper data indicated that the funds saw net outflows of $81 million in the week ended Wednesday, versus last week’s inflows of $2.583 billion.

This week’s inflow lowered the funds’ year-to-date net inflow to $44.201 billion from last week’s $44.282 billion – which had set a new peak cumulative inflow figure for the year so far, according to the Prospect News data analysis of the data, surpassing the previous zenith of $43.001 billion seen during the week ended Nov. 23.

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