Junk funds see $1.14 billion of cash leave, setting new low for year

New York, June 28 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – suffered a $1.135 billion loss of cash in the week to June 27, according to fund-flow statistics generated by AMG Data Services Inc.

The significant outflow followed a $232 million decline the week before and dragged the cumulative year-to-date figure down to negative $18.57 billion, the lowest point so far in 2018, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

The previous cumulative low point was $17.52 billion set three weeks ago.

Flows have been choppy over recent weeks but the latest figure emphasized an overall downward trend.

Before the most recent two outflows, the funds had gained $324 million – but that followed a substantial $2.420 billion outflow, then before that a minuscule $18 million withdrawal of cash.

In the week to May 23, the funds had added $261 million of cash but there were outflows of $0.542 billion and $0.755 billion in the preceding weeks and those followed a gain of $0.526 billion in the week ending May 2 and suffering a large $2.489 billion loss the week before that and an even larger $2.971 billion inflow in the April 18 week.

The April 11 week saw a gain of $989 million which ended three weeks of losses – of $573 million, $619 million and $1.174 billion – which in turn succeeded a minuscule $11 million gain in the week to March 14.

Before that there had been a substantial period of outflows including the yawning $6.31 billion cash bleed for the week ended Feb. 14.

According to a Prospect News analysis of the data, that giant-sized outflow was not only by far the biggest cash drain seen so far this 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.

With the most recent week’s statistic, the funds have now seen three inflows and seven outflows in the past 10 weeks.

So far this year the there have been eight inflows and 18 outflows in the 26 weeks to date in 2018, according to the Prospect News analysis.

IG corporates add further

Among other asset classes, investment-grade corporate funds were again popular, attracting $1.542 billion of cash.

That followed a moderate gain of $411 million the week before and a healthier $2.038 billion inflow the week before that, up sharply from $1.325 billion the previous week and following inflows of $0.849 billion, $2.529 billion, $3.069 billion, $0.804 billion and $0.997 billion in the preceding weeks.

The IG funds continue to have seen 10 inflows in the last 10 weeks.

Apart from the Feb. 14 and Feb. 21 weeks, every week so far this year has seen positive flows and in fact before those two weeks in February investment-grade corporates saw a 21-week run of inflows dating back to mid-September, according to a Prospect News analysis of the data.

The latest influx of cash raises the year-to-date inflow for the IG corporates to $52.20 billion from $50.66 billion, yet another new peak for the year so far.

© 2015 Prospect News.
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