Cash inflows into U.S.-based stock ETFs, corporate bonds, junk debt
Huge cash inflowed into U.S.-based stock exchange-traded funds, corporate bond funds and high-yield “junk” bond portfolios
Investors’ appetite for risk was on display yet again this week with huge cash inflows into U.S.-based stock exchange-traded funds, corporate bond funds and high-yield “junk” bond portfolios, according to Refinitiv’s Lipper research service data on Thursday.
U.S.-based investment-grade corporate bond funds attracted more than $2.3 billion in the week ended Wednesday, extending their weekly inflow streak since late January, Lipper said. U.S.-based high-yield junk bond funds attracted more than $1.1 billion in the week ended Wednesday, their sixth consecutive week of inflows, Lipper said.
Stock exchange-traded funds (ETFs) attracted about $7.35 billion of inflows, Lipper said. Investors in exchange-traded funds are thought to represent institutional investors, including hedge funds. Mutual funds are thought to represent retail investors. U.S. stock mutual funds posted cash withdrawals of more than $1.84 billion, Lipper added.
Tom Roseen, head of research services at Lipper, said a “tale of two cities” still exists within equities.
Mom and Pop are still net sellers of equity funds, withdrawing $1.8 billion for the week, while (institutional investors) continue to pad the coffers of equity ETFs, Roseen said. But for the 14th consecutive week, the average fund investor remained enamored by fixed-income funds, pouring in roughly $1.7 billion this week.
Roseen said investors put money to work, partly evident in the cash withdrawals from money-market funds. Investors yanked cash from money funds to pay for taxes but they also felt compelled to put money to work in rising markets, he said. U.S.-based money market funds posted $54.5 billion in outflows in the week ended Wednesday, their largest cash withdrawal since August 2011.
He attributed that to tax season and investors’ moves back into bonds and equity funds.
Outside the United States, U.S.-based emerging market funds attracted more than $417 million in the week ended Wednesday, extending their weekly inflow streak since early January, according to Lipper. U.S.-based international funds attracted $1.22 billion in the week ended Wednesday, their first inflows since mid-March, Lipper said.