Short/Intermediate Investment Grade Funds Have Yet To Report A Weekly Outflow In 2024

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During LSEG Lipper’s fund-flows week that ended February 28, 2024, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the second week in three, adding a net $47.4 billion.

Money market funds (+$42.7 billion, +0.10%), taxable bond funds (+$3.0 billion, +0.59%), equity funds (+$2.5 billion, +1.52%), alternatives funds (+$221 million, +0.20%), and tax-exempt bond funds (+$72 million, +0.15%) attracted net new capital.

Commodities funds (-$569 million, -0.03%) and mixed-assets funds (-$500 million, +0.50%) reported outflows over the week.

Money market funds reported their first weekly inflow in four.

All 10 spot bitcoin ETFs reported net inflows of $1.6 billion, marking the sixth straight weekly inflow since these launched.


Index Performance

At the close of LSEG Lipper’s fund-flows week, U.S. broad-based equity indices reported positive returns—the DJIA (+0.87%), Nasdaq (+2.35%), Russell 2000 (+2.28%), and S&P 500 (+1.77%) were all in the black.

Both the Bloomberg Municipal Bond Total Return Index (+0.13%) and Bloomberg U.S. Aggregate Bond Total Return Index (+0.35%) rose over the week.

Overseas indices also traded mixed—DAX (+3.10%), FTSE 100 (-0.17%), Nikkei 225 (+2.09%), S&P/TSX Composite (-0.06%), and Shanghai Composite (+0.09%).


Rates/Yields

Both the two- (-0.34%) and 10-year (-1.27%) Treasury yields fell over the course of the week.

According to Freddie Mac, the 30-year fixed-rate average (FRM) increased for the fourth straight week—the weekly average is currently at 6.94%. The United States Dollar Index (DXY, -0.38%) and VIX (-10.84%) both decreased over the course of the week.

The CME FedWatch Tool currently has the likelihood of the Federal Reserve cutting interest rates by 25 basis points (bps) at current levels at 2.5%. This tool forecasted a 46.2% possibility of a 25-bps cut one month ago. The next meeting is scheduled for March 20, 2024.


Market Recap

On Thursday, February 22, the Department of Labor reported that new claims for unemployment benefits fell by 12,000 to 201,000—economists had forecasted 218,000. The numbers still suggest the labor market remains tight which, all else equal, will be a vote of confidence toward keeping rates steady for the Federal Reserve. The National Association of Realtors reporting existing home sales rose by 3.1% in the month of January. As sales rose, the median existing home price increased as well, rising by 5.1% from last year. All cash sales made up 32% of the transactions during the month, marking the largest proportion since June 2014. Equity markets soared on the day where Nvidia (NVDA) reported the largest single-session increase in market value on record—Nasdaq (+2.96%), S&P 500 (+2.11%), DJIA (+1.18%), and Russell 2000 (+0.96%). Short-dated Treasury yields outpaced longer-dated counterparts—two- (+0.75%), three- (+0.90%), and five-year yields (+0.42%) all jumped.

The calendar week ended Friday, February 23, and equity markets traded mixed with the Nasdaq falling 0.28% and the DJIA (+0.16%), Russell 2000 (+0.14%), and S&P 500 (+0.03%) appreciating slightly. Far away from markets, Intuitive Machines (LUNR) landed the Odysseus spacecraft on the moon’s surface, becoming the first American spacecraft to do so since Apollo 17 in 1972.

On Monday, February 26, the Department of Commerce reported that sales of new single-family homes in the U.S. increased by 1.5% in January, equaling a seasonally adjusted annual rate of 661,000—economists had forecasted that annual rate would be 680,000. Year over year, sales improved 1.8% with the median new house price falling 2.6% from 12 months ago. Equity markets traded mixed once again—Russell 2000 (+0.61%), S&P 500 (-0.38%), DJIA (-0.16%), and Nasdaq (-0.13%).

On Tuesday, February 27, the Department of Commerce said that orders on durable goods fell 6.1% during January, marking the largest drop since April 2020. On an annual basis, durable goods orders fell 0.8%. After three consecutive monthly increases in consumer confidence, the Conference Board reported a decrease in February despite lower inflation expectations. Treasury yields rose across the board as equity markets traded mostly positive led by the small-cap focused Russell 2000 (+1.34%).

Our fund-flows week wrapped up Wednesday, February 28, with the Department of Commerce downgrading the previously reported gross domestic product (GDP) growth—fourth quarter increase fell to a positive 3.2% from originally reported 3.3%. Both equity markets and Treasury yields fell on the day—two- (-1.23%) and 10-year (-1.00%) Treasury yields were both down.


Exchange-Traded Equity Funds

Exchange-traded equity funds recorded $9.5 billion in weekly net inflows, marking two weeks of inflows over the last three. The macro-group posted a 1.52% gain on the week, its fourth straight plus-side return.

Large-cap ETFs (+$3.2 billion), developed international markets ETFs (+$1.7 billion), and multi-cap ETFs (+$1.3 billion) attracted the top inflows among the equity ETF subgroups. Large-cap ETFs observed their fourth weekly inflow over the past six weeks.

Developed global markets ETFs (-$157 million) suffered the only weekly outflow under equity ETFs. Developed global markets ETFs recorded their second outflow over the past three weeks.

Over the past fund-flows week, the two top equity ETF flow attractors were Invesco QQQ Trust Series 1 (QQQ, +$2.9 billion) and JPMorgan BetaBuilders Europe ETF (BBEU, +$699 million).

Meanwhile, the two bottom equity ETFs in terms of weekly outflows were SPDR S&P 500 Trust (SPY, -$706 million) and ProShares UltraPro (TQQQ, -$589 million).


Exchange-Traded Fixed Income Funds

Exchange-traded taxable fixed income funds observed a $2.5 billion weekly inflow—the macro-group’s tenth straight inflow. Fixed income ETFs reported a gain of 1.04% on average, its first positive return in four weeks.

Alternative bond funds (+$1.7 billion), short/intermediate investment grade ETFs (+$1.5 billion), and government & Treasury fixed income ETFs (+$123 million) were the top subgroups under taxable bond ETFs to observe inflows. Short/intermediate investment grade ETFs have only reported three weeks of outflows over the past 21, despite realizing their first plus-side return in four weeks.

High yield ETFs (-$421 million), emerging market debt ETFs (-$315 million), and short/intermediate government & Treasury ETFs (-$189 million) were the only subgroups to post net outflows. This was the third consecutive week of outflows for high yield ETFs.

Municipal bond ETFs reported a $350 million inflow over the week, marking the first back-to-back weeks of net inflows of the year.

iShares Bitcoin Trust (IBIT, +$1.1 billion) and Fidelity Wise Origin Bitcoin Fund (FBTC, +$653 million) attracted the largest amounts of weekly net new money for taxable fixed income ETFs.

On the other hand, Schwab Short-Term US Treasury ETF (SCHO, -$906 million) and iShares iBoxx $High Yield Corporate Bond ETF (HYG, -$718 million) suffered the largest weekly outflows under all taxable fixed income ETFs.


Conventional Equity Funds

Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$7.0 billion) for the one-hundred-and-seventh straight week. Conventional equity funds posted a weekly return of positive 1.50%, the fourth straight week of gains.

Multi-cap funds (-$2.0 billion), large-cap funds (-$1.5 billion), and mid-cap funds (-$1.1 billion) were the top conventional equity fund subgroups to realize weekly outflows. Multi-cap conventional funds have only seen one week of inflows in the last 27 as they suffer their largest weekly outflow of 2024.

No conventional mutual fund subgroup posted weekly net inflows.


Conventional Fixed Income Funds

Conventional taxable-fixed income funds realized a weekly inflow of $500 million—marking their ninth consecutive weekly inflow. The macro-group logged a positive 0.31% on average—their first gain in four weeks.

Short/intermediate investment-grade funds (+$445 million), alternative bond funds (+$137 million), and general domestic taxable fixed income funds (+$118 million) were the top subgroups to post inflows on the week. Short/intermediate investment-grade mutual funds have observed nine consecutive weekly inflows, despite only seeing two weeks of positive returns in those nine.

World income funds (-$117 million), short/intermediate government & Treasury funds (-$82 million), and government & Treasury fixed income funds (-$77 million) suffered the largest outflows among conventional taxable fixed income subgroups over the trailing week. World income funds have witnessed three outflows in the last four weeks.

Municipal bond conventional funds (ex-ETFs) returned a positive 0.17% over the fund-flows week, marking back-to-back weeks of gains for the first time this year. The subgroup experienced a $278 million outflow, the second straight weekly outflow and only the second weekly outflow reported in 2024.


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Disclaimer: This article is for information purposes only and does not constitute any investment advice.

The views expressed are the views of the author, not necessarily those of Refinitiv ...

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