Investors Pump $9.0 Billion Into Equity Funds Amid Rising Expectations Of Market Volatility

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During Refinitiv Lipper’s fund-flows week ended May 12, 2021, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the thirteenth week in 15 (+20.1 billion).

Equity funds (+$9.0 billion), money market funds (+$6.1 billion), taxable bond funds (+$5.1 billion), and tax-exempt bond funds (+$750 million) all attracted net inflows over the trailing five trading days.

Market Wrap-Up

At the close of Refinitiv Lipper’s fund-flows week, U.S. broad-based indices each logged their worst performing week in more than five weeks. Russell 2000 (-4.74%), NASDAQ (-4.05%), S&P 500 (-2.51%), and DJIA (-1.88%) all finished deep in the red. Overseas, broad-based global indices Shanghai Composite (+0.92%), FTSE 100 (+0.85%), and DAX 30 (+0.45%) recorded positive performances. The 10-two Treasury yield spread rose 7.23% to 1.53, while the indicator for expected market volatility over the next 30 days (VIX) rose 51.26% to 27.59.

On Thursday, May 6, U.S. equity markets closed the session slightly in the black. DJIA (+0.93%) was the daily winner, while the NASDAQ (+0.37%) ended a four-day losing streak. Positive ADP private sector job data reported April employment increased by 742,000 jobs from March—the largest month-over-month increase in six months. The Department of Labor (DOL) also reported a seasonally adjusted initial jobless claims of 473,000, marking the lowest weekly level since the start of the pandemic. The VIX closed the day at 18.24. Friday was a different story for job data, as investors were floored by the DOL reporting nonfarm payrolls employment only rose by 266,000 in April—drastically missing the forecasted mark of an increase of one million. The unemployment rate (6.1%) rose for the first time since last April as nonfarm employment is still down 8.2 million from pre-pandemic levels. Even with the negative news, U.S. broad-based indices ended the day with positive daily performance. After Treasury Secretary Janet Yellen walked back her recent comments geared towards raising rates, investors appear to be betting that Friday’s weak job data will continue to fuel the Federal Reserve’s accommodative monetary policy. The 10-year Treasury yield rose for the first time in five sessions and the VIX ended the week ended the near 52-week lows at 16.84.

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