During LSEG Lipper’s fund-flows week that ended May 8, 2024, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the third straight week, adding a net $36.4 billion.
This past week, money market funds (+$24.5 billion), taxable bond funds (+$8.1 billion), equity funds (+$3.6 billion), municipal bond funds (+$1.1 billion), alternative investments funds (+$384 million), and commodities funds (+$81 million) reported inflows. After seeing their third-largest weekly outflow on record, money markets have recorded three straight weeks of inflows.
Mixed-assets funds (-$290 million) was the only group to suffer outflows.
Actively managed equity (-$373 million) reported outflows for the seventh straight week and eighteenth week in 20, while passive equity funds (+$3.1 billion) have attracted new capital in 10 of the last 11 weeks.
Actively managed fixed-income funds (+$1.9 billion) saw their seventeenth weekly inflow over the past 20 weeks. Passive fixed-income funds (+$7.2 billion) reported their highest inflow of the year and largest since week ended November 8, 2023.
Spot bitcoin ETFs saw an inflow (+$81 million) a week after seeing their first outflow since the products launched—since debuting spot bitcoin ETFs have attracted nearly $11.0 billion.
Index Performance
At the close of LSEG Lipper’s fund-flows week, U.S. broad-based equity indices reported positive returns for the second week in three—the DJIA (+3.04%), Nasdaq (+4.47%), Russell 2000 (+3.78%), and S&P 500 (+3.37%) were all in the black. This marked the highest weekly return for the DJIA since the week ending November 16, 2022.
The FTSE U.S. Broad Investment Grade Bond Total Return Index (+1.05%), High Yield Market Total Return Index (+1.05%), and Municipal Tax-Exempt Investment Grade Bond Index (+1.09%) logged a weekly gain, marking the largest weekly appreciation since the week ending December 20, 2023.
Overseas broad-based indices realized positive performance as well—the Dax Total Return (+3.80), FTSE 100 (+2.87%), Nikkei 225 (+1.13%), S&P/TSX Composite (+2.79%), and Shanghai Composite (+0.98%) all finished in the black.
Rates/Yields
Both the 2-year (-2.36%) and 10-year (-2.89%) Treasury yield fell over the course of the week. At the close of session Wednesday, the 10-2 Treasury yield spread inverted slightly from last week.
According to Freddie Mac, the 30-year fixed-rate average (FRM) fell for the first week in six, with the weekly average currently at 7.09%. Both the US Dollar Index (DXY, -0.20%) and VIX (-18.38%) decreased over the course of the week—the DXY has fallen in three straight weeks.
The CME FedWatch Tool has the likelihood of the Federal Reserve cutting interest rates by 25 basis points (bps) at 8.4%. This tool forecasted a 56.1% possibility of a 25-bps cut one month ago. The next meeting is scheduled for June 12, 2024.
Exchange-Traded Equity Funds
Exchange-traded equity funds recorded a $6.0 billion weekly inflow, the tenth inflow over the past 11 weeks. The macro-group posted a 3.31% gain on the week, the second positive return in three weeks and highest return since week ended December 12, 2023.
Small-cap ETFs (+$1.9 billion), equity income ETFs (+$1.2 billion), and large-cap ETFs (+$1.2 billion) were the top equity ETF groups to log inflows. Small-Cap ETFs recorded their first inflow in four weeks, mostly attributed to strong Small-Cap Core (+$1.7 billion) inflows.
Sector equity ETFs (-$975 million), mid-cap ETFs (-$277 million), and world sector equity ETFs (-$104 million) suffered the largest weekly outflows under equity ETFs. Last week Health/Biotechnology ETFs and Consumer Services ETFs were the laggards in under sector equity. This week, Real Estate ETFs (-$561 million) and Natural Resources ETFs (-$439 million) led the subgroup to its third outflow in four weeks.
Over the past fund-flows week, the two top equity ETF flow attractors were iShares Core S&P 500 ETF (NYSE:IVV) (IVV, +$1.9 billion) and iShares Russell 2000 ETF (NYSE:IWM) (IWM, +$807 million).
Meanwhile, the two bottom equity ETFs in terms of weekly outflows were SPDR S&P 500 ETF Trust (ASX:SPY) (SPY, -$4.1 billion) and iShares U.S. Real Estate ETF (NYSE:IYR) (IYR, -$603 million).
Exchange-Traded fixed-income Funds
Exchange-traded taxable fixed-income funds observed a $9.4 billion weekly inflow—the macro-group’s largest inflow since week ended January 9, 2019. It was the group’s second inflow in three weeks and seventh inflow over the last 10. fixed-income ETFs reported a gain of 0.81% on average, marking the first time seeing back-to-back weeks of positive returns in two months.
General domestic taxable fixed-income ETFs (+$2.9 billion), short/intermediate investment-grade ETFs (+$2.3 billion), and high yield ETFs (+$1.9 billion) were the top subgroups under taxable bond ETFs to observe inflows. General domestic taxable fixed-income ETFs were led by Lipper’s Loan Participation ETF (+$1.9 billion) classification which logged their largest inflow of all time. Short/intermediate investment-grade ETFs realized their ninth straight week of net new money.
No taxable fixed-income ETF subgroup saw an outflow over the past week.
Municipal bond ETFs reported a $922 million inflow over the week, marking the largest inflow of the year and third consecutive weekly inflow. Municipal bond ETFs saw their first weekly gain (+0.81%) in three weeks.
iShares Core U.S. Aggregate Bond ETF (NYSE:AGG) (AGG, +$798 million) and Janus Henderson AAA CLO ETF (NYSE:JAAA) (JAAA, +$771 million) attracted the largest amounts of weekly net new money under fixed-income ETFs.
On the other hand, Goldman Sachs Access Treasury 0-1 Year ETF (NYSE:GBIL) (GBIL, -$178 million) and iShares TIPS Bond ETF (NYSE:TIP) (TIP, -$106 million) suffered the largest weekly outflows.
Conventional Equity Funds
Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$3.3 billion) for the one-hundred-and-seventeenth straight week. Conventional equity funds posted a weekly return of positive 3.13%, the second week of gains in three.
Multi-cap funds (-$1.5 billion), mid-cap funds (-$566 million), and emerging markets equity funds (-$559 million) were the top conventional equity fund subgroups to realize weekly outflows. Multi-cap conventional mutual funds posted their seventh consecutive week of outflows, led by Multi-Cap Core Funds (-$1.0 billion).
Small-cap funds (+$397 million) and large-cap funds (+$87 million) were the two subgroups under conventional equity mutual funds to see inflows over the trailing fund flows week. Small-cap value (+$272 million) took home the top spot under small-cap mutual funds.
Conventional fixed-income Funds
Conventional taxable-fixed-income funds realized a weekly outflow of $1.4 billion—marking the fourth outflow in five weeks. The macro-group logged a gain of 0.87% on average—their third straight week reporting positive performance.
High yield funds (+$477 million), general domestic taxable fixed-income funds (+$324 million), and alternative bond funds (+$256 million) were the top groups under taxable fixed-income mutual funds to log inflows over the week. Conventional high-yield mutual funds have seen three straight weeks of plus-side returns as they have also seen back-to-back weeks of inflows for the first time since early March.
Short/intermediate investment-grade funds (-$1.1 billion), government & Treasury funds (-$650 million) and short/intermediate Government & Treasury funds (-$260 million) led taxable fixed-income mutual fund subgroups in weekly net outflows. Short/intermediate investment-grade funds have seen four outflows in the last five weeks.
Municipal bond conventional funds (ex-ETFs) returned a positive 0.99% over the fund-flows week, giving the subgroup its second gain in eight weeks. Tax-exempt fixed-income mutual funds experienced a $133 million inflow, marking the second straight week of inflows.
by Jack Fischer