Junk funds lose $703 million in week, seven consecutive outflow

New York, March 1 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw investor withdrawals for a seventh straight week, according to numbers released Thursday.

For the week ended Wednesday, Feb. 28, the weekly reporting-only domestic funds saw $703 million of cash depart, according to sources familiar with the fund-flow statistics generated by AMG Data Services Inc.

The outflow followed the loss of $335 million reported the previous week by the Arcata, Calif.-based unit of Thomson Reuters Corp’ s Lipper analytics division.

Still, the ink was not as deeply red as in the Feb. 14 week when $6.31 billion was pulled out of the funds.

According to a Prospect News analysis of the data, that net outflow was not only by far the biggest cash drain seen so far this year, more than double the $3.08 billion recorded during the week ended Jan. 17, the first outflow of the year – it was also the second-largest outflow on record since Lipper began tracking fund flows back in 1992, exceeded only by the record $7.07 billion that the funds lost during the week ended Aug. 6, 2014.

The year-to-date cumulative net outflow is now $13.20 billion, according to a Prospect News analysis of the data.

Also according to that analysis, the funds have seen outflows in eight of the last 10 weeks versus two cash gains, which occurred in the first two weeks of the year.

IG corporates bounce back

Looking at fund flows for other asset classes during the week, investment-grade corporate funds gained $1.372 billion.

That followed a $1.57 billion net inflow the week before which in turn was a rebound from the rare $790 million net outflow the week before, the first downturn after 21 straight weeks of gains dating back to mid-September, according to a Prospect News analysis of the data.

The latest week’s gain raises the year-to-date net inflow figure for the IG corporates to $21.03 billion.

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