Municipal debt funds stayed on track for the 18th consecutive week of net inflows, this time for $0.9 billion, according to Tom Roseen, head of research services at Lipper and author of the firm’s weekly U.S. fund flow data commentary.
“Of all the groups, muni debt funds have been attractor of continuous asset flows. We’ve not only seen money coming in but we’ve seen it increasing over the last 18 weeks as well,” Roseen said. “Yields for quite a few of the classifications on an after-tax adjusted basis still are outpacing the funds’ taxable brethren.”
The week ending Aug. 15 also saw the third largest inflows into institutional money funds since March. That’s probably because institutions are parking their money for the time being, Roseen said. “They don’t trust the economy—people are iffy right now. Because of the low volumes in the market, I think people have taken the opportunity to park some money on the sideline and they’re using this instrument that’s not paying them anything now waiting for opportunity. They could also be padding their coffers for quarterly payments and there are quarterly funding requirements for 401(k)s,” Roseen said.
Although investors are concerned about the global economy, they’re still not going to treasuries, Roseen said. “Investors are going out on the risk spectrum in search of yield,” into flexible portfolios, emerging market debt and high yield debt, he said.
Meanwhile, equity ETFs suffered net redemptions for the second consecutive week, with two funds accounting for the majority of outflows, according to Lipper’s US fund flow data for the week ending Aug. 15. The SPDR S&P 500 ETF had $3.1B in net redemptions while the iShares Russell 2000 index had $1.0B in net redemptions, according to Lipper.
“Both (ETFs) are instruments that people use for quick moves in and out,” said Roseen. “We have seen big swings on a weekly basis… we’re coming to the end of the reporting season, there wasn’t a lot of news over the last week and people are still on vacation. So maybe people are thinking it’s time to pull back, we’ve had some pretty good runs, take some money off the table and see what’s going to happen going forward.”