Junk funds gain $521 million this week, bouncing back from outflow last week

By Paul Deckelman

New York, June 1 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – bounced back this week after stumbling the week before, according to numbers released on Thursday.

It was their second cash gain within the last three weeks.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that $521 million more came into those weekly reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, May 31.

That net inflow stood in contrast to the $568 million 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 May 24.

Before that, the funds had seen a $650 million inflow during the week ended May 17, which, in turn had followed a pair of outflows – a $1.73 billion cash hemorrhage during the week ended May 10, and a $386 million downturn in the week ended May 3.

Those two weeks of outflows, totaling $2.11 billion, followed a $291 million net inflow seen a little over a month ago, during the week ended April 26.

Year-to-date outflow narrows

After a relatively strong start to the year, March, April and then May turned choppy and changeable.

According to a Prospect News analysis of the data, this week’s inflow was the 11th so far this year, versus 11 outflows during that time.

It was the fourth cash gain in the last 10 weeks, dating back to the week ended March 29, versus six outflows during that stretch.

It lowered the estimated year-to-date net outflow number to $5.49 billion from $6.01 billion last week.

That 2017 net outflow figure remains narrower than the yawning $6.42 billion estimated net outflow seen during the week ended March 15 – the most cumulative red ink seen for the year so far.

Before their headlong plunge into negative territory seen during the past three months, the flows had shown a relatively strong start to the year.

They had posted six inflows during the first 10 reporting weeks of the year, reaching a peak cumulative net inflow total of $1.62 billion during the week ended Feb. 22, and they were still in positive territory for the year to date as recently as the week ended March 1, with a $1.38 billion net inflow, before falling into the red the following week and staying there after that.

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 continue gains

Looking at fund flows for other asset classes during the week, investment-grade corporate funds posted their 24th consecutive gain overall and their 22nd straight inflow this year, with no outflows yet recorded for 2017.

The Lipper data indicated that the funds saw a net inflow of $981 million during the reporting week ended Wednesday.

That follows the inflow of $2.09 billion recorded last week, ended May 24.

Earlier in May, the IG corporate funds had seen inflows of $3.1 billion for the week ended May 17, as well as $2.07 billion during the week ended May 10 and $1.05 billion seen during the week ended May 3.

Those cash gains had followed the $4.7 billion inflow recorded during the week ended April 26.

The latest inflow brought the year-to-date surge so far up to an estimated $57.33 billion this week – the peak 2017 cumulative inflow level so far, versus $56.35 billion seen last week, the previous high point for the year.

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