Torsten Asmus
During LSEG Lipper’s fund flows week that ended June 19, 2024, investors were overall net redeemers of fund assets (including both conventional funds and ETFs) for the first week in three, removing a net $30.0 billion.
This past week, money market funds (-$23.5 billion), equity funds (-$7.4 billion), commodities funds (-$697 million), and mixed-assets funds (-$293 million) suffered outflows.
Taxable bond funds (+$1.5 billion), alternative investments (+$797 million), and tax-exempt bond funds (+$16 million) posted net inflows.
Both active (-$3.9 billion) and passive (-$3.4 billion) equity funds suffered outflows. Actively managed equity funds have seen 13 straight weeks of outflows, while passive equity funds logged their second straight outflow. Last week, passive equity funds saw their third-largest weekly outflow in more than the past 500 weeks-the largest since the week ending February 7, 2018.
Active (-$566 million) fixed income funds recorded their first weekly outflow in five weeks. Passive (+$2.1 billion) fixed income funds reported their sixth inflow over the last seven weeks.
In aggregate, spot bitcoin ETFs saw an outflow (-$468 million) over the week, led by Fidelity Wise Origin Bitcoin Fund (FBTC, -$255 million). FBTC’s $11.0 billion in AUM represents 19.5% of the spot bitcoin ETF market.
Index Performance
At the close of LSEG Lipper’s fund flows week, U.S. broad-based equity indices reported mostly positive returns-S&P 500 (+1.22%), Nasdaq (+1.44%), and DJIA (+0.32%). The Nasdaq has realized seven straight weeks of positive returns. The small-cap focused Russell 2000 (-1.55%) ended in the red for the fourth week in five.
Broad-based fixed income indices also saw mostly plus-side returns-FTSE U.S. Broad Investment Grade Bond Total Return Index (+0.68%) and FTSE Municipal Tax-Exempt Investment Grade Bond Index (+0.33%) recorded gains. The FTSE High Yield Market Total Return Index (-0.13%) logged its first loss in three weeks.
Overseas broad-based indices struggled with the DAX Total Return (-3.91%), FTSE 100 (-0.97%), Nikkei 225 (-2.11%), S&P/TSX Composite (-2.10%), and Shanghai Composite (-0.68%) all seeing losses.
Rates/Yields
Both the 2- (-1.28%) and 10-year (-2.66%) Treasury yields fell over the course of the week. Since the start of the year, both yields have risen (+10.87% and +9.03%, respectively).
According to Freddie Mac, the 30-year fixed-rate average (FRM) decreased for the sixth week in seven, with the weekly average currently at 6.87%. Both the United States Dollar Index (DXY, +0.58%) and VIX (+2.11%) increased 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 89.7%. This tool forecasted a 22.8% 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 $1.6 billion weekly outflow-its third in four weeks. The macro-group posted a 0.56% gain on the week, its third straight week in the black.
Large-cap ETFs (-$2.2 billion), multi-cap ETFs (-$408 million), and world sector equity ETFs (-$237 million) posted the largest outflows. Under large-cap ETFs, the S&P 500 Index Funds Lipper classification continue to suffer (-$4.4 billion). Last week, this classification took home the headline, seeing its largest outflow on record (-$17.4 billion).
Sector equity ETFs (+$815 million), equity income ETFs (+$318 million), and mid-cap ETFs (+$280 million) witnessed the top weekly inflows under equity ETFs. Lipper’s Science and Technology ETF (+$579 million) classification was the top classification under sector equity ETFs for the second straight week.
Over the past fund flows week, the two top equity ETF flow attractors were iShares S&P 500 Core ETF (IVV, +$18.1 billion) and Invesco QQQ Trust Series 1 (QQQ, +$1.9 billion).
Meanwhile, the two bottom equity ETFs in terms of weekly outflows were SPDR S&P 500 ETF Trust (SPY, -$22.9 billion) and Direxion Daily Semiconductor Bull 3X Shares (SOXL, -$1.2 billion).
Exchange-Traded Fixed Income Funds
Exchange-traded taxable fixed income funds observed a $3.2 billion weekly inflow-the macro group’s sixth weekly inflow in seven weeks. Fixed income ETFs reported a gain of 0.49% on average, marking the second gain in three weeks.
Government & Treasury ETFs (+$1.2 billion), short/intermediate government & Treasury ETFs (+$873 million), and short/intermediate investment-grade ETFs (+$565 million) were the top subgroups under taxable bond ETFs to observe inflows. Government & Treasury ETFs have posted 17 inflows over the last 20 weeks and have seen eight straight.
Emerging markets debt ETFs (-$19 million) were the only taxable fixed income subgroup to record an outflow on the week. Emerging markets debt ETFs have posted three weekly outflows in four weeks.
Municipal bond ETFs reported a $150 million inflow over the week, marking the third consecutive weekly inflow and seventh over the last 10. Municipal bond ETFs also realized their third gain (+0.29%) in as many weeks.
iShares 20+ Year Treasury Bond ETF (TLT, +$481 million) and iShares MBS ETF (MBB, +$444 million) attracted the largest amounts of weekly net new money under fixed income ETFs.
On the other hand, iShares iBoxx High Yield Corporate Bond ETF (HYG, -$400 million) and SPDR Blackstone Senior Loan ETF (SRLN, -$270 million) suffered the largest weekly outflows.
Conventional Equity Funds
Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$5.7 billion) for the one-hundred-and-twenty-third straight week. Conventional equity funds posted a weekly return of positive 0.19%, the third straight week of gains.
Large-cap funds (-$2.4 billion), mid-cap funds (-$859 million), and multi-cap funds (-$845 million) 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 (-$952 million).
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 outflow of $1.6 billion-marking the eighth outflow over the past 10 weeks. The macro-group realized a gain of 0.38% on average-their second plus-side return in three weeks.
Short/intermediate investment-grade funds (-$1.0 billion), general domestic taxable fixed income funds (-$252 million), and high yield funds (-$115 million) led taxable fixed income subgroups in net outflows. Short/intermediate investment-grade funds suffered their eighth outflow in 10 weeks, led by the Core Plus Bond Funds classification (-$651 million).
Alternative bond funds (+$40 million) were the only taxable fixed income subgroup to observe inflows over the week, as they observed their seventh weekly intake in eight.
Municipal bond conventional funds (ex-ETFs) returned a positive 0.48% over the fund flows week, giving the subgroup its third straight weekly gain. Tax-exempt fixed income mutual funds experienced a $134 million outflow, marking the seventh outflow in 10 weeks.
*Lipper weekly fund flows period is from the prior Thursday through Wednesday.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.