Refinitiv Lipper’s fund asset groups (including both mutual funds and ETFs) had net outflows of $2.6 billion for the fund-flows trading week ended Wednesday, August 26. Equity Funds (-$7.8 billion) and money market funds (-$4.6 billion) were responsible for all of the net negative flows while taxable bond funds and municipal bond funds took in net new money of $8.7 billion and $1.0 billion, respectively. Taxable and muni bond funds ran their net inflow streaks to twenty weeks and sixteen weeks, respectively.

Market Overview

The equity indices all posted gains for the fund-flows trading week. The technology-heavy Nasdaq Composite Index appreciated 4.7% to lead the way while the S&P 500 Index and Dow Jones Industrial Average recorded gains of 3.1% and 2.3%, respectively.

The Nasdaq is up 30.1% for the year to date despite its first quarter (-14.2%) COVID-19 induced slump. The Nasdaq’s bounce during the second and thirds quarters has also been spurred by investor reaction to the coronavirus. Investors have sought out large-cap tech stocks as a safe haven while they wait out the uneven economic recovery.

Market news was mixed this week as could be expected in these bumpy economic times. On the negative side, first-time unemployment claims inched upwards (to 1.1 billion from 976 million) as the labor market’s uneven recovery continues and U.S. consumer confidence cratered to a 6-year low. The consumer confidence index fell to 84.8 this month from 91.7 in July. On the plus side of the ledger, the U.S/China trade deal appears to have been resuscitated, U.S. home sales increased at a record rate for the second straight month, and the purchasing managers’ indexes for both the manufacturing and service sectors grew at a higher than anticipated rate.

ETFs

ETFs took in $2.3 billion of net new money. Taxable bond ETFs (+$2.8 billion) were responsible for all of the net inflows while equity ETFs (-$527 million) and tax-exempt ETFs (-$20 million) both saw money leave. The largest individual net inflows for taxable bond ETFs belonged to two below-investment-grade products as iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and Xtrackers USD High Yield Corporate Bond ETF (HYLB) grew their coffers by $797 million and $316 million, respectively. The largest net negative flows for equity ETFs were attributable to SPDR S&P 500 ETF (SPY, -$1.5 billion) and Invesco S&P 500 Low Volatility ETF (SPLV, -$459 million).

Equity Mutual Funds

Equity mutual funds (-$7.2 billion) suffered net outflows for the eighteenth consecutive week. Domestic equity funds (-$6.2 billion) were responsible for the majority of the net outflows while non-domestic equity funds accounted for $1.0 billion of the total net negative flows. At the peer group level, the largest net outflows belonged to Large-Cap Growth Funds (-$1.2 billion) and International Multi-Cap Core Funds (-$476 million) among the domestic and non-domestic fund universes, respectively.

Fixed Income Mutual Funds

The taxable bond (+$5.9 billion) and tax-exempt bond (+$1.0 billion) fund groups both continued their long runs of consecutive net inflows. The largest net-positive flows for taxable bond funds belonged to the Core Plus Bond Funds (+$1.3 billion) and Core Bond Funds (+$1.0 billion) peer groups while for tax-exempt bond funds, Short Muni Debt Funds (+$518 million) led the way.

Money Market Mutual Funds

Money market funds experienced net outflows (-$4.6 billion) for the fifth straight week. The net negative flows were driven by Institutional U.S. Government Money Market Funds (-$15.1 billion) while the largest net inflow among the peer groups belonged to Institutional U.S. Treasury Money Market Funds (+$5.5 billion).