Refinitiv Lipper’s fund asset groups (including both mutual funds and ETFs) had net outflows of $16.0 billion for the fund-flows trading week ended Wednesday, September 23. Funds have now seen net money leave for seven consecutive weeks during which time their coffers have shrunk by $133.7 billion. In this week’s activity, equity funds (-$14.9 billion) were responsible for the lion’s share of the net outflows, while money market funds contributed $2.7 billion to the total net negative flows. Equity funds have now seen money leave for six straight weeks while money market funds ran their losing streak to nine weeks. On the plus side of the ledger, taxable bond funds (+$1.1 billion) and municipal bond funds (+$499 million) both took in net new money.
Market Overview
The equity indices all suffered significant losses during the fund-flows trading week as the Dow Jones, S&P 500, and the NASDAQ lost 4.5%, 4.4%, and 3.5%, respectively.
It was a mostly dour week for the equity markets as all three indices posted losses in four out of five trading days. After starting the trading week with three consecutive daily losses (weighed down by continued COVID-19 concerns, lack of an additional stimulus package, and choppy economic data), the markets rebounded on Tuesday, September 22.
The equity indices all posted gains that day due in part to the Congressional testimony of Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell. Both economic officials reiterated that the emergency measures enacted by the Federal Reserve were working as anticipated. But they also warned that they believed they had exhausted all of the tools in their toolbox and an additional fiscal stimulus package was needed from the government to sustain the economic recovery.
This momentum did not carry through to Wednesday as the NASDAQ Composite, S&P 500, and the Dow fell 2.7%, 2.4%, and 1.9%. Stocks faltered in the second half of the trading day as it became apparent that the additional fiscal stimulus package will most likely be lost (at least in the near-term) to the political infighting over filling the vacant Supreme Court seat that was created by the passing of Supreme Court Justice Ruth Bader Ginsburg.
ETFs
ETFs suffered net outflows of $14.9 billion for the week, with equity ETFs (-$12.6 billion) accounting for the majority of these net outflows. The largest individual net negative flows among this asset group belonged to S&P 500 (NYSE:SPY) (-$8.4 billion), iShares Russell 2000 ETF (NYSE:IWM) (-$1.5 billion), and Technology Select Sector (NYSE:XLK) (-$1.3 billion).
Taxable bond ETFs contributed $2.4 billion to the total net outflows for ETFs with the most significant net negative flows attributable to iShares iBoxx High Yield Corporate Bond (NYSE:HYG) (-$2.9 billion) and Bloomberg Barclays High Yield Bond (NYSE:JNK) (-$811 million). Municipal bond ETFs registered net positive flows of $124 million for the week.
Equity Mutual Funds
Equity mutual funds (-$2.3 billion) suffered net negative flows for the twenty-second consecutive week. Nondomestic equity funds (-$1.4 billion) were responsible for the bulk of this week’s net outflows, while domestic equity funds contributed $941 million to the total. At the peer group level, Large-Cap Growth Funds (-$600 million) and Emerging Market Funds (-$405 million) had the largest net negative flows.
Fixed Income Mutual Funds
The taxable bond (+$3.5 billion) and tax-exempt bond (+$375 million) fund groups grew their impressive streaks of consecutive weekly net inflows to 24 and 20, respectively. The Core Plus Bond Funds (+$1.2 billion) and Short Investment-Grade Debt Funds (+$954 million) peer groups paced taxable bond funds, while the tax-exempt funds were led by Short Muni Debt Funds (+$325 million) and Short/Intermediate Muni Debt Funds (+$142 million) for the second straight week.
Money Market Mutual Funds
Money market funds saw net money leave (-$2.7 billion) their coffers for the ninth straight week. The net outflows were driven by the Institutional Money Market Funds (-$7.0 billion) and Money Market Instrument Funds (-$2.1 billion) peer groups. On the plus side, Institutional U.S. Government Money Market Funds took in $6.3 billion of net new money.