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During LSEG Lipper’s fund-flows week that ended July 3, 2024, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the ninth week in 11, adding a net $39.9 billion.

This past week, money market funds (+$23.3 billion), equity funds (+$10.3 billion), taxable bond funds (+$6.0 billion), commodities funds (+$414 million), tax-exempt bond funds (+$345 million), and alternative investments funds (+$254 million) attracted inflows.

Mixed-assets funds (-$679 million) was the only group to see outflows.

Active equity funds (-$5.9 billion) suffered outflows for the fifteenth straight week. This was their largest weekly outflow since the week ending January 3, 2024. Passive equity funds (+$16.2 billion) reported the second-largest weekly inflow of the year as they attracted new capital in back-to-back weeks.

Both active (+$6.0 billion) and passive (+$327 million) fixed income funds saw inflows. Active fixed income funds have attracted inflows in nine of 10 weeks. Passively managed fixed income funds have seen five straight weeks of inflows.

In aggregate, spot bitcoin ETFs saw an inflow (+$222 million) over the week, the first inflow in three weeks.

Index Performance

At the close of LSEG Lipper’s fund-flows week, U.S. broad-based equity indices reported mostly positive returns— DJIA (+0.46%), Nasdaq (+2.15%), Russell 2000 (+0.92%), and S&P 500 (+1.08%). The DJIA has appreciated in three consecutive weeks.

Broad-based fixed income indices mostly saw losses on the week—FTSE U.S. Broad Investment Grade Bond Total Return Index (-0.02%) and FTSE Municipal Tax-Exempt Investment Grade Bond Index (-0.10%) realized sub-zero returns. The FTSE High Yield Market Total Return Index (+0.04%) logged its fourth gain over the prior five weeks.

Overseas broad-based indices had a strong showing—the DAX Total Return (+2.37%), FTSE 100 (+0.43%), Nikkei 225 (+1.83%), S&P/TSX Composite (+2.44%), and Shanghai Composite (+0.24%) all observed plus-side returns.

Rates/Yields

The two-year Treasury yield (-0.53%) fell while the 10-year (+1.33%) rose over the course of the week. Since the start of the year, both yields have risen (+10.38% and +12.44%, respectively).

According to Freddie Mac, the 30-year fixed-rate average (FRM) increased for the first week in five, with the weekly average currently at 6.95%. Both the United States Dollar Index (DXY, -0.73%) and VIX (-3.80%) fell over the course of the week.

For the next meeting, the CME FedWatch Tool has the likelihood of the Federal Reserve leaving interest rates unchanged at 93.3%. This tool forecasted a 19.3% possibility of a 25-bps cut one month ago. The next meeting is scheduled for July 31, 2024.

Exchange-Traded Equity Funds

Exchange-traded equity funds recorded a $19.0 billion weekly inflow—its second in three weeks. The macro-group posted a 1.22% gain on the week, its fourth gain in five weeks.

Large-cap ETFs (+$12.1 billion), multi-cap ETFs (+$2.9 billion), and developed global markets ETFs (+$1.8 billion) posted the largest inflows. Large-cap ETFs have seen eight weekly inflows over the past 10. Under this subgroup, the S&P 500 Index Funds Lipper classification added $7.2 billion.

World sector equity ETFs (-$268 million), small-cap ETFs (-$122 million), and emerging markets equity ETFs (-$110 million) witnessed the top weekly outflows under equity ETFs. World sector equity ETFs have suffered 12 outflows over the prior 15 weeks.

Over the past fund-flows week, the two top equity ETF flow attractors were iShares S&P 500 Core ETF (IVV, +$6.2 billion) and Invesco QQQ Trust Series 1 (QQQ, +$3.9 billion).

Meanwhile, the two equity ETFs leading in weekly outflows were iShares Russell 1000 ETF (IWB, -$1.3 billion) and VanEck Semiconductor ETF (SMH, -$983 million).

Exchange-Traded Fixed Income Funds

Exchange-traded taxable fixed income funds observed a $982 million weekly inflow—the macro group’s eighth weekly inflow in nine weeks. Taxable fixed income ETFs reported a slight gain of 0.01% on average, marking the second plus-side return in three weeks.

General domestic taxable fixed income ETFs (+$2.0 billion), government & Treasury fixed income ETFs (+$864 million), and world income ETFs (+$37 million) were the only subgroups under taxable bond ETFs to observe inflows. General domestic taxable fixed income ETFs was led by the corporate debt ETFs BBB-Rated classification (+$1.6 billion), which realized its largest inflows since the week ending March 6, 2024.

Short/intermediate investment-grade ETFs (-$889 million), high yield ETFs (-$747 million), and short/intermediate government & Treasury ETFs (-$181 million) were the top taxable fixed income subgroups to record an outflow on the week. This was the first weekly outflow in four weeks for short/intermediate investment-grade ETFs.

Municipal bond ETFs reported a $75 million outflow over the week, marking the second straight weekly outflow. Municipal bond ETFs also realized their fourth gain (+0.06%) in five weeks.

iShares 20+ Year Treasury Bond ETF (TLT, +$1.2 billion) and iShares iBoxx $Investment Grade Corporate Bond ETF (LQD, +$1.1 billion) attracted the largest amounts of weekly net new money under fixed income ETFs.

On the other hand, iShares Core US Aggregate Bond ETF (AGG, -$912 million) and iShares 7-10 Year Treasury Bond ETF (IEF, -$908 million) suffered the largest weekly outflows.

Conventional Equity Funds

Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$8.7 billion) for the one-hundred-and-twenty-fifth straight week. Conventional equity funds posted a weekly return of positive 0.98%.

Large-cap funds (-$2.7 billion), multi-cap funds (-$1.7 billion), and small-cap funds (-$1.1 billion) were the top conventional equity fund subgroups to realize weekly outflows. Large-cap conventional mutual funds logged their twenty-eighth outflow over the past 30 weeks, led by the Large-Cap Growth classification (-$1.8 billion).

No subgroup under conventional equity mutual funds reported an inflow over the trailing week.

Conventional Fixed Income Funds

Conventional taxable-fixed income funds realized an inflow of $4.9 billion—marking their first inflow in four weeks. The macro-group realized a gain of 0.03% on average—their second week in the black over the past three.

Short/intermediate investment-grade funds (+$3.3 billion), general domestic taxable fixed income funds (+$900 million), and high yield funds (+$541 million) led taxable fixed income subgroups in net inflows. Short/intermediate investment-grade funds was lifted by the Ultra-Short Obligations Funds classification (+$1.5 billion).

Government & Treasury fixed income funds (-$119 million), world income funds (-$74 million), and emerging markets debt funds (-$65 million) were the only taxable fixed income subgroup to observe outflows over the week.

Municipal bond conventional funds (ex-ETFs) returned a negative 0.04% over the fund-flows week, giving the subgroup back-to-back weeks of sub-zero returns. Tax-exempt fixed income mutual funds experienced a $420 million inflow, marking the first inflow in four weeks.

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