Junk mutual funds, ETFs see largest outflow of year so far as $2.57 billion leaves space

By Abigail W. Adams

Portland, Me., May 16 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw an outflow of $2.57 billion for the week ended Wednesday, according to a market source.

The outflow is the largest of 2019 and the second consecutive outflow for funds with $212 million leaving the space in the week ended May 8.

While the year has been characterized by a strong influx of money entering the space, three of the five outflows recorded this year to date have occurred recently.

Funds saw a modest inflow of $21 million for the week ended May 1.

The modest inflow was preceded by an outflow of $521 million for the week ended April 24 – the first outflow in seven weeks.

Prior to the end of April, funds had seen a steady streak of substantial inflows.

Inflows were $1.1 billion for the week ended April 17, $655 million for the week ended April 10, $2 billion for the week ended April 3, $590 million for the week ended March 27, $1.8 billion for the week ended March 20 and $1.04 billion for the week ended March 13.

Prior to the week ended April 24, the last outflow was for the week ended March 6 when $1.91 billion left the space.

The March 6 outflow broke a streak of six consecutive inflows, which included the record-setting inflow of $3.86 billion for the week ended Feb. 6.

The inflow for the week ended Feb. 6 was the largest the space had seen since December 2016.

While the outflows have interrupted a steady streak of inflows, fund flows in 2019 are still net positive with a cumulative inflow of $11.7 billion in the 19 weeks thus far, according to a Prospect News analysis of the reports by AMG Data Services Inc., an Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division.

For the past 10 weeks, funds have seen seven inflows and three outflows.

There have been 14 inflows and five outflows in the 19 weeks of 2019, according to the Prospect News analysis.

IG corporates see inflows

Among other asset classes, investment-grade corporate funds saw an inflow of $2.175 billion for the week ended Wednesday. The inflow follows a substantial inflow of $3.33 billion for the week ended May 8.

The large inflow follows a modest inflow of $375 million for the week ended May 1, which was preceded by a massive inflow of $5.86 billion for the week ended April 24.

High-grade funds have seen a steady streak of inflows.

There was an inflow of $2.31 billion for the week ended April 17, $2.9 billion for the week ended April 3, $2.75 billion for the week ended March 27 and $5.14 billion for the week ended March 20.

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