Junk funds see $1.63 billion outflow, third straight weekly loss

By Paul Deckelman

New York, June 30 – High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw their third consecutive weekly outflow, and their fourth cash loss in the last six weeks, market sources said Thursday.

The outflows the past three weeks followed two straight inflows.

Sources familiar with the fund-flow statistics generated by AMG Data Services Inc. said that some $1.63 billion more left those weekly reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday.

That cash loss followed the $766 million outflow reported last Thursday by the Arcata, Calif.-based unit of Thomson Reuters Corp.’s Lipper analytics division for the seven-day period ended June 22, which itself had followed a $1.80 billion outflow seen during the week ended June 15.

Those three outflows, totaling $4.20 billion, stood in stark contrast to the two straight weeks of inflows – totaling some $893.15 million – that had preceded them.

These included the $748.15 million inflow during the week ended June 8, and the $145 million inflow during the week ended June 1.

The fund flows have been choppy over the last several months, according to a Prospect News analysis of the figures.

In May, the funds had seen a $562.3 million downturn during the week ended May 25 and before that, a $1.14 billion inflow during the week ended May 18, which had followed two straight weeks of downturns totaling $3.71 billion – a $1.81 billion outflow for the week ended May 4 and then a $1.91 billion cash loss for the week ended May 11.

Those two weeks of downturns, in turn, had broken a string of four consecutive weeks of inflows totaling nearly $1.97 billion between the week ended April 6 and the week ended April 27.

The four weeks of April inflows had meantime been part of a longer stretch of 10 weeks out of the prior 11, dating back to the week ended Feb. 17, during which more cash had come into those funds than flowed out of them, according to the analysis.

The latest week’s outflow was the 12th cash loss since the start of the year, versus 14 inflows in that time.

Year-to-date inflow reduced

With 26 reporting weeks now in the books for 2016, the year-to-date net inflow fell to $3.22 billion, Lipper said, down from the $4.85 billion seen last week.

The year-to-date inflow total thus moves further away from the $9.66 billion zenith recorded during the April 27 week, which had been the fourth consecutive new peak level for the year so far, according to the Prospect News analysis.

The fund flows – which started the year off with a string of outflows – reached their peak net outflow level for the year during the week ended Feb. 10, when they showed cumulative red ink of $5.17 billion.

For all of 2015, meanwhile, there had been 28 inflows and 24 outflows in that time, the analysis showed, producing a net outflow for the year of $7.05 billion.

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 corporate funds fall

Looking at fund flows for other asset classes, investment-grade corporate funds finally weakened after a long string of successes. They saw a net outflow this week of $638.60 million, the Lipper data indicated, bringing the funds’ year-to-date net inflow down to $14.59 billion.

It was the first cash loss seen after 16 consecutive weeks of cash gains for the IG corporate funds.

That outflow followed the $1.84 billion inflow Lipper saw last week, when the year-to-date total stood at some $15.23 billion.

Lipper also said that leveraged loan-participation funds suffered a net outflow of $525.39 million in the week ended Wednesday.

Unlike the junk funds and the IG corporate funds, the loan funds have spent most weeks this year so far on the downside. The latest red ink swelled the funds’ year-to-date net outflow to $5.57 billion, Lipper said.

© 2015 Prospect News.
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