U.S. Weekly FundFlows Insight Report: Fixed Income Funds Drive The Week’s Overall Net Inflows

Lipper’s fund asset groups (including both mutual funds and exchange-traded funds) took in approximately $5.3 billion in net new money for the fund-flows trading week ended Wednesday, January 15. This overall net positive flow is the seventh in the last eight weeks (starting with the fund-flows week ended November 27, 2019) for funds during which they have grown their coffers by $110.3 billion. This week’s net inflows were led by the taxable bond funds group (+$12.2 billion), while municipal bond funds contributed $2.3 billion to the total. Conversely, money market funds and equity funds suffered net outflows of $8.2 billion and $1.1 billion, respectively.

Market Overview

The major equity indices continued their hot streak as they all recorded positive returns for the sixth consecutive fund-flows trading week. This week’s gains were led by the Nasdaq Composite Index (+1.42%), while the S&P 500 Index and the Dow Jones Industrial Average appreciated 1.11% and 0.99%, respectively. For the six-week time period (which began with the fund-flows week ending December 11), the Nasdaq (+8.08%) once again outdistanced the S&P 500 (+5.67%) and the Dow (4.99%).

The most significant market news this week was the announcement on the last trading day that the U.S. and China signed the first part of their trade agreement, which will hopefully bring to a halt the two-year trade war between the countries which has had a negative impact on global growth. The major goals of the pact are to further open Chinese markets to external companies and investors, protect the intellectual property of U.S. companies operating in China, and increase the sales of U.S. goods to China. The agreement did not remove the U.S. tariffs on $370 billion of Chinese goods, which represents approximately 75% of China’s total imports. Discussions about tariff reductions were tabled until future negotiations and were not expected to be completed until Q4 of this year, after the U.S. presidential election.

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