by Jack Fischer
During LSEG Lipper’s fund-flows week that ended April 17, 2024, investors were overall net redeemers of fund assets (including both conventional funds and ETFs) for the fourth week in five, removing an astonishing $143.5 billion—the largest weekly outflow since the week ending September 16, 2009.
Alternative investments (+$117 million) was the only group to attract inflows since last Thursday.
Money market funds (-$118.5 billion), equity funds (-$19.5 billion), taxable bond funds (-$3.2 billion), municipal bond funds (-$1.5 billion), mixed-assets funds (-$711 million), and commodities funds (-$216 million) all suffered outflows over the week.
After reporting their second-largest weekly outflow of year, money market funds suffered their third-largest weekly outflow on record—trailing only the weeks ending March 3, 1995 (-$193.0 billion) and December 31, 2003 (-$131.6 billion).
Spot bitcoin ETFs reported their smallest weekly intake since coming to market (+$18 million). This was also their fifteenth straight weekly inflow since launching. Grayscale Trust (BTC) (NYSE:GBTC) (GBTC, -$478 million) and ARK 21Shares Bitcoin ETF (NYSE:ARKB) (ARKB, -$56 million) were the only spot bitcoin ETFs to post weekly outflows.
Index Performance
At the close of LSEG Lipper’s fund-flows week, U.S. broad-based equity indices reported negative returns for the third straight week—the DJIA (-1.84%), Nasdaq (-3.01%), Russell 2000 (-3.97%), and S&P 500 (-2.68%) were all in the red.
Both the Bloomberg Municipal Bond Total Return Index (-0.17%) and Bloomberg U.S. Aggregate Bond Total Return Index (-0.24%) fell over the week. The Bloomberg Municipal Bond Total Return Index has declined in five straight weeks.
Overseas indices realized mostly negative returns as well—DAX (-2.87%), FTSE 100 (-2.32%), Nikkei 225 (-5.26%), and S&P/TSX Composite (-3.39%) posted losses. The Shanghai Composite (+1.42%) was the only broad-based index to appreciate since last Thursday, returning gains in nine of the last 11 weeks.
Rates/Yields
The 2-year (-0.78%) fell, while the 10-year (+0.86%) Treasury yield rose over the course of the week.
According to Freddie Mac, the 30-year fixed-rate average (FRM) increased for the third consecutive week, with the weekly average currently at 7.10%—the first time this year above 7.0%. Both the US Dollar Index (DXY, +0.67%) and VIX (+13.23%) increased over the course of the week.
The CME FedWatch Tool currently has the likelihood of the Federal Reserve cutting interest rates by 25 basis points (bps) at 0.0% and is now giving a rate hike a probability of 1.7%. This tool forecasted a 7.8% possibility of a 25-bps cut one month ago. The next meeting is scheduled for May 1, 2024.
Exchange-Traded Equity Funds
Exchange-traded equity funds recorded $13.4 billion in weekly net outflows, marking the first outflow in eight weeks and largest since the week ending December 21, 2022. The macro-group posted a 3.10% loss on the week. Not only was this the third straight weekly decline, but the worst weekly return since the week ending October 25, 2023.
Large-cap ETFs (-$9.3 billion), sector equity ETFs (-$1.7 billion), and small-cap ETFs (-$1.3 billion) were the top macro-groups to suffer weekly outflows under equity ETFs. This was the second straight week of outflows for large-cap ETFs, but only the third weekly outflow over the last 10.
Developed international markets ETFs (+$875 million), mid-cap ETFs (+$268 million), and equity income ETFs (+$53 million) were the only equity ETF subgroups to log inflows. Despite three weeks of negative returns, developed international markets ETFs (led by international multi- and large-cap ETFs) observed their seventeenth consecutive weekly inflow.
Over the past fund-flows week, the two top equity ETF flow attractors were iShares Core S&P 500 ETF (NYSE:IVV) (IVV, +$1.0 billion) and Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL) (SOXL, +$782 million).
Meanwhile, the two bottom equity ETFs in terms of weekly outflows were SPDR S&P 500 ETF Trust (ASX:SPY) (SPY, -$9.8 billion) and iShares Russell 2000 ETF (NYSE:IWM) (IWM, -$1.7 billion).
Exchange-Traded Fixed Income Funds
Exchange-traded taxable fixed-income funds observed a $170 million weekly outflow—the macro-group’s first outflow in four weeks. Fixed-income ETFs reported a loss of 1.07% on average, their third consecutive sub-zero return.
Short/intermediate investment-grade ETFs (+$1.6 billion), short/intermediate government & Treasury ETFs (+$962 million), and government & Treasury ETFs (+$825 million) were the top subgroups under taxable bond ETFs to observe inflows for the second straight week. After a record-setting weekly inflow, short/intermediate investment-grade ETFs realize their sixth straight week of net new money.
High yield ETFs (-$2.6 billion) and general domestic taxable fixed income ETFs (-$1.2 billion) were the only two taxable fixed income ETF subgroups to witness outflows on the week. This was the largest weekly outflow for high-yield ETFs since the week ending February 22, 2023.
Municipal bond ETFs reported an $815 million outflow over the week, marking the group’s third weekly outflow in five. Municipal bond ETFs saw their first weekly gain in five weeks.
iShares Core U.S. Aggregate Bond ETF (NYSE:AGG) (AGG, +$786 million) and iShares 7-10 Year Treasury Bond ETF (NYSE:IEF, +$514 million) attracted the largest amounts of weekly net new money for taxable fixed income ETFs.
On the other hand, iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) (HYG, -$1.9 billion) and iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD) (LQD, -$1.6 billion) suffered the largest weekly outflows under all taxable fixed income ETFs.
Conventional Equity Funds
Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$6.1 billion) for the one-hundred-and-fourteenth straight week. Conventional equity funds posted a weekly return of negative 3.04%, the third straight week of sub-zero performance.
Large-cap (-$1.8 billion), small-cap funds (-$1.1 billion), and multi-cap funds (-$1.1 billion) were the top conventional equity fund subgroups to realize weekly outflows. Large-cap conventional mutual funds witnessed their eighteenth consecutive week of outflows.
No subgroup saw inflows under equity mutual funds.
Conventional Fixed Income Funds
Conventional taxable-fixed income funds realized a weekly outflow of $3.0 billion—marking the third weekly outflow in four weeks and largest outflow since the week ending November 1, 2023. The macro-group logged a negative 0.33% on average—their fifth weekly decline in six.
Short/intermediate investment-grade funds (-$1.5 billion), high-yield funds (-$1.2 billion), and government & Treasury fixed-income funds (-$252 million) were the top taxable fixed income mutual fund subgroups to post weekly net outflows. Short/intermediate investment-grade funds suffered their largest weekly outflow since the week ending November 8, 2023. Conventional high-yield mutual funds have reported four weeks of outflows over the prior five.
General domestic taxable fixed-income funds (+$181 million)—led by Lipper’s Multi-Sector Income classification—was the only under-taxable fixed-income mutual funds to see an inflow over the past week. This was the sixteenth weekly inflow in the last 17.
Municipal bond conventional funds (ex-ETFs) returned a negative 0.01% over the fund-flows week, giving the subgroup five consecutive weeks of losses. Tax-exempt fixed-income mutual funds experienced a $659 million outflow, marking the third week of outflows in the last four.