Fund Investors Remain Risk Averse For The Week Despite Strong Market Returns

For the sixth consecutive week, investors were overall net purchasers of fund assets (including those of conventional funds and ETFs), injecting $75.0 billion for Lipper’s fund-flows week ended April 8, 2020. Fund investors were net purchasers of money market funds (+$72.6 billion) and equity funds (+$8.1 billion) but were net redeemers of taxable fixed-income funds (-$3.4 billion), and municipal bond funds (-$2.3 billion) this week.

Market Wrap-Up

For the fund-flows week ended April 8, 2020, markets chalked up plus-side returns, recovering some of the declines witnessed in the last few weeks as investors’ hopes grew that the coronavirus outbreak might stabilize soon, and oil prices initially looked like they might be on the mend as well.

The Dow Jones Industrial Average Price Only Index (+11.89%) witnessed the largest gains for the fund-flows week of the broadly followed U.S. indices, followed by the S&P 500 Price Only Index (+11.31%). Meanwhile, the Nasdaq Composite Price Only Index (+9.92%) was the relative laggard of the group. Overseas, the Xetra DAX Total Return Index (+7.66%) and Nikkei 225 Price Only Index (+5.52%) chalked up the largest returns of the often-followed broad-based global indices, while the Shanghai Composite Price Only Index (+3.50%) was the relative laggard for the week.

On Thursday, April 2, the Dow overcame a rough start to end the day up 470 points as investors hoped that negotiations among some of the behemoth oil producers might curb oil production and provide a reprieve to embattled prices. While concerns over monstrous first-time jobless claims for the previous week (6.64 million, a record amount) placed a pall over the market early in the day, a tweet from President Donald Trump that he expected Saudi Arabia and Russia to cut production by 10 million barrels per day sent the major benchmarks higher.

On Friday, April 3, stocks tumbled after the Department of Labor reported that March nonfarm payrolls declined by 701,000—far exceeding the estimates by analysts—and the unemployment rate rose to 4.4%. Most analysts felt the numbers are actually far worse than reported. The additional first-time jobless claims mentioned above along with the prior week’s report of 3.3 million could put the total in the 10 million range, with an unemployment rate closer to 10%. There were two bright spots on the day: Oil rose 11.9% on the day, to $28.34, and the March ISM nonmanufacturing index, while declining to 52.5, still showed signs of slow growth.

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