by Jack Fischer
During LSEG Lipper’s fund-flows week that ended July 11, 2024, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the tenth week in 12, adding a net $6.5 billion.
This past week, money market funds (+$4.3 billion), taxable bond funds (+$3.4 billion), tax-exempt bond funds (+$775 million), and alternative investment funds (+$640 million) attracted inflows.
Equity funds (-$2.3 billion), mixed-assets funds (-$226 million), and commodities funds (-$37 million were the only groups to see outflows.
Active equity funds (-$781 million) suffered outflows for the sixteenth straight week. Passive equity funds (-1.6 billion) reported their first outflow in three weeks.
Both active (+$560 million) and passive (+$3.6 billion) fixed-income funds saw inflows. Active fixed-income funds have attracted inflows in eight of 10 weeks. Passively managed fixed-income funds have seen six straight weeks of inflows.
In aggregate, spot bitcoin ETFs saw an inflow (+$679 million) over the week, marking the largest inflow since the first week of June despite five straight weeks of negative returns.
Index Performance
At the close of LSEG Lipper’s fund-flows week, U.S. broad-based equity indices reported positive returns— DJIA (+1.05 %), Nasdaq (+2.52%), Russell 2000 (+0.74%), and S&P 500 (+1.75%). The DJIA has appreciated in four consecutive weeks.
Broad-based fixed-income indices also realized gains - FTSE U.S. Broad Investment Grade Bond Total Return Index (TWO:00785B) (+0.53%), FTSE Municipal Tax-Exempt Investment Grade Bond Index (+0.26%), and FTSE High Yield Market Total Return Index (+0.60%) logged plus-side returns. The FTSE High Yield Market Total Return Index saw its fifth gain over the prior six weeks.
Overseas broad-based indices had a mixed showing—the DAX Total Return (+0.36%), FTSE 100 (+0.84%), Nikkei 225 (+2.89%), and S&P/TSX Composite (+0.67%) ended in the black, while the Shanghai Composite (-1.47%) continues to struggle with its sixth week in the red over the last eight.
Rates/Yields
The 2-year (-1.43%) and 10-year (-1.45%) Treasury yield fell over the week. Since the start of the year, both yields have risen (+8.80% and +10.81%, respectively).
According to Freddie Mac, the 30-year fixed-rate average (FRM) fell for the fifth week in six, with the weekly average currently at 6.89%. The US Dollar Index (DXY, -0.34%) fell, while the {{(44336|VIX}} (+5.91%) 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 91.2%. This tool forecasted a 12.2% 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 $1.0 billion weekly inflow—its third straight weekly intake. The macro-group posted a 1.48% gain on the week, its fifth gain in six weeks.
Developed international markets ETFs (+$769 million), sector equity ETFs (+$615 million), and equity income ETFs (+$607 million) posted the largest inflows. Developed international market ETFs were led by Lipper’s International Multi-Cap Core classification (+$287 million) as it reports its first back-to-back weeks of inflows since early May.
Multi-cap ETFs (-$1.1 billion), large-cap ETFs (-$766 million), and world-sector equity ETFs (-$57 million) witnessed the top weekly outflows under equity ETFs. This was the largest weekly outflow for multi-cap ETFs since April 2020.
Over the past fund-flows week, the two top equity ETF flow attractors were Invesco QQQ Trust Series 1 (NASDAQ:QQQ) (QQQ, +$1.2 billion) and Invesco S&P 500 Equal Weight ETF (NYSE:RSP) (RSP, +$458 million).
Meanwhile, the two equity ETFs leading in weekly outflows were Oppenheimer Russell 1000 Dynamic Multifactor (NYSE:OMFL) (OMFL, -$1.9 billion) and SPDR S&P 500 ETF Trust (ASX:SPY) (SPY, -$1.8 billion).
Exchange-Traded fixed-income Funds
Exchange-traded taxable fixed-income funds observed a $4.2 billion weekly inflow, the macro group’s ninth weekly inflow in 10 weeks. Taxable fixed-income ETFs reported a gain of 0.44% on average, marking the third plus-side return in four weeks.
Government & Treasury fixed-income ETFs (+$1.6 billion), short/intermediate government & Treasury ETFs (+$971 million), and high yield ETFs (+$677 million) were the top subgroups under taxable bond ETFs to observe inflows.
No taxable fixed-income macro-group suffered outflows over the prior fund-flows week.
Municipal bond ETFs reported a $626 million inflow over the week, marking the first weekly inflow in three. Municipal bond ETFs also realized their fifth gain (+0.31%) in six weeks.
iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) (TLT, +$1.1 billion) and iShares National Muni Bond ETF (NYSE:MUB) (MUB, +$405 million) attracted the largest amounts of weekly net new money under fixed-income ETFs.
On the other hand, iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD) (LQD, -$820 million) and iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY) (SHY, -$229 million) suffered the largest weekly outflows.
Conventional Equity Funds
Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$3.4 billion) for the one-hundred-and-twenty-sixth straight week. Conventional equity funds posted a weekly return of positive 1.24%.
Large-cap funds (-$1.9 billion), mid-cap funds (-$636 million), and small-cap funds (-$312 million) were the top conventional equity fund subgroups to realize weekly outflows. Large-cap conventional mutual funds logged their twenty-ninth outflow over the past 30 weeks, led by the Large-Cap Growth classification (-$1.4 billion).
Multi-cap funds (+$295 million) and developed global markets funds (+$12 million) were the only macro groups under conventional equity mutual funds to see inflows.
Conventional fixed-income Funds
Conventional taxable-fixed-income funds realized an outflow of $831 million—marking their fourth outflow in five weeks. The macro-group realized a gain of 0.46% on average—their third week in the black over the past four.
Short/intermediate investment-grade funds (-$637 million), alternative bond funds (-$101 million), and short/intermediate government & Treasury funds (-$83 million) led taxable fixed-income subgroups in net outflows.
General domestic taxable fixed-income funds (+$121 million) was the only taxable fixed-income subgroup to observe inflows over the week.
Municipal bond conventional funds (ex-ETFs) returned a positive 0.33% over the fund-flows week, giving the subgroup its first weekly gain in three weeks. Tax-exempt fixed-income mutual funds experienced a $149 million inflow, marking the second inflow in three weeks.