Junk funds lose $1.73 billion of cash, third successive outflow

New York, July 5 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – again saw cash depart as $1.729 billion left during the week ended July 4, according to fund-flow statistics generated by AMG Data Services Inc.

The latest figure was the third consecutive outflow and significantly bigger than the previous two combined, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

In the week to June 27, the funds lost $1.135 billion and in the week before that the cash drain was $232 million.

The recent downward trend follows a choppy period which saw the funds gain $324 million before the string of outflows began.

Preceding that, there was a big $2.420 billion outflow following a minimal $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 cumulative outflow for the year is now $20.30 billion, the worst figure so far in 2018, compared to $18.57 billion the previous week.

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

There have been eight inflows and 19 outflows in the 26 weeks to date in 2018, according to the Prospect News analysis.

IG corporates see small inflow

Among other asset classes, investment-grade corporate funds saw an inflow, but drastically reduced from the week before.

In the week to July 4, the cash addition was $171 million versus the previous week’s $1.542 billion.

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 $52.37 billion from $52.20 billion, once more a new peak for the year so far.

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