For the seventh consecutive week, investors were overall net purchasers of fund assets (including those of conventional funds and ETFs), injecting $62.9 billion for Lipper’s fund-flows week ended April 15, 2020. Fund investors were net purchasers of money market funds (+$46.8 billion), taxable fixed income funds (+$10.3 billion), equity funds (+$5.0 billion), and municipal bond funds (+$833 million) this week.
Market Wrap-Up
For the fund-flows week ended April 15, 2020, markets remained volatile but trended toward the upside as investors learned that several state governors began making plans to reopen their economies, hospitalizations from the coronavirus pandemic began to slow, and the Federal Reserve Board announced details of its Main Street Lending program. However, the beginning of Q1 earnings reporting season and disappointing economic news kept many at bay.
The NASDAQ Composite Price Only Index (+3.74%) witnessed the strongest gains for the fund-flows week of the broadly followed U.S. indices, followed by the S&P 500 Price Only Index (+1.21%). Meanwhile, the Russell 2000 Price Only Index (-0.65%) suffered the only negative returns of the group. Overseas, the Nikkei 225 Price Only Index (+2.27%) chalked up the only plus-side returns of the often-followed broad-based global indices, while the FTSE 100 Price Only Index (-0.49%) suffered the largest losses for the week.
On Thursday, April 9, despite news that an additional 6.6 million new jobless claims were filed for the prior week, the market finished the holiday shortened trading week on an up note, with the main indices recovering about half of the loses witnessed in March. The S&P 500 (+12.10%) chalked up its strongest weekly gain since the week ended October 11, 1974 (+14.12%). The Fed announced details of its new Main Street Lending program, which will provide support to mid-sized businesses. Investors were also lifted by news that there was a decline in the number of new COVID-19 infections being reported, despite learning that the preliminary consumer-sentiment survey took its biggest one-month decline on record, dropping to its lowest level (71) since 2011. The markets were closed on Friday in observance of Good Friday.
However, on Monday, April 13, U.S. stocks finished mixed as investors prepared for a dismal start to the Q1 corporate earnings season. This was partially offset by news that OPEC, Russia, and the U.S. came to an agreement on Sunday to cut global crude output by 9.7 billion barrels per day beginning in May, hopefully putting an end to the month-long price war. Markets were lifted after New York Governor Andrew Cuomo said that New York and five other states were crafting plans to reopen their economies after claiming the “worst is over” for New York. Nonetheless, near month gold prices rose to their strongest point since October 2012, settling at $1,761.40 per ounce.
On Tuesday, stocks rallied as parts of the U.S. and Europe showed signs that the number of COVID-19 cases were leveling off and as some pundits began to talk about reopening the U.S. economy as early as May 1. The Dow closed the day up 2.4% at 23,949.76, despite a few early Q1 corporate earnings reports striking a cautious tone for the earnings season and the International Monetary Fund’s chief economist warning of one of the worst recessions since the Great Depression. Markets were supported by upbeat news from China that while March exports and imports continued to fall, they did so at a slower rate. However, equity markets closed lower on Wednesday, April 15, as dismal corporate earnings were reported along with another major slide in near-month crude oil prices. The Dow declined 1.9% on the day and crude oil prices finished at $19.87 per barrel after the IEA predicted a record decline in demand. Along with disappointing earnings reports, investors reacted to news that March U.S. retail sales and industrial production decline by 8.7% and 5.4%, respectively. The 10-year Treasury yield declined by 13 basis points to 0.63%.
Exchange-Traded Equity Funds
For the second week in a row, equity ETFs witnessed net inflows, taking in $7.7 billion for the most recent fund-flows week. Authorized participants (APs) were net purchasers of domestic equity ETFs (+$9.6 billion), injecting net new money, also for the second consecutive week. However, nondomestic equity ETFs witnessed their eighth week of net outflows, handing back $1.8 billion this past week. Health Care Select Sector SPDR ETF (XLV, +$2.2 billion) and iShares ESG MSCI USA ETF (ESGU, +$2.0 billion) attracted the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum, SPDR S&P 500 ETF (SPY, -$4.0 billion) experienced the largest individual net redemptions, and iShares Edge MSCI USA Quality Factor ETF (QUAL, -$1.2 billion) suffered the second largest net redemptions of the week.
Exchange-Traded Fixed Income Funds
For the third week in a row, taxable fixed income ETFs witnessed net inflows, taking in $7.9 billion. APs were net purchasers of corporate investment-grade ETFs (+$5.9 billion), corporate high-yield ETFs (+$4.0 billion), and flexible ETFs (+$1.6 billion), while being net redeemers of government-Treasury ETFs (-$3.3 billion) and government-mortgage ETFs (-$562 million). iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD, +$2.7 billion) and iShares Short-Term Corporate Bond ETF (IGSB, +$1.7 billion) attracted the largest amounts of net new money of all individual taxable fixed income ETFs. Meanwhile, iShares U.S. Treasury Bond ETF (GOVT, -$1.7 billion) and iShares 20+ Years Treasury Bond ETF (TLT, -$690 million) handed back the largest individual net redemptions for the week. For the first week in seven, municipal bond ETFs witnessed net inflows, taking in $100 million this week.
Conventional Equity Funds
For the second consecutive week, conventional fund (ex-ETF) investors were net redeemers of equity funds, withdrawing $2.7 billion, despite posting a 0.93% plus-side return for the flows week. Domestic equity funds, handing back a little less than $738 million, also witnessed their second weekly net outflows while posting a 1.07% return on average for the fund-flows week. Nondomestic equity funds—posting a 0.64% gain on average—experienced their second consecutive weekly net outflows, handing back $2.0 billion this past week. On the domestic equity side, fund investors continued to shun large-cap funds (-$1.1 billion), while investors on the nondomestic equity side were net redeemers of international equity funds (-$1.8 billion).
Conventional Fixed Income Funds
For the first week in seven, taxable bond funds (ex-ETFs) witnessed net inflows, taking in $2.4 billion this past week, while posting a 1.60% return for the fund-flows week. Investors were net purchasers of corporate high-yield funds (+$3.7 billion) and government-Treasury & mortgage funds (+$177 million), while international & global debt funds (-$600 million), government-Treasury funds (-$347 million), and government-mortgage funds (-$210 million) witnessed the largest net outflows of the group. For the first week in seven, municipal bond funds (ex-ETFs) witnessed net inflows—attracting $734 million—while posting a 1.18% gain on average for their third straight weekly market gain.
