Short/Intermediate Investment-Grade ETFs Set Record Weekly Inflows, Attracting $3.5 Billion

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The data in the article below is sourced from Lipper’s Global Fund Flows application. GFF can be found on LSEG Workspace (“FundFlows”).

During LSEG Lipper’s fund-flows week that ended April 10, 2024, investors were overall net redeemers of fund assets (including both conventional funds and ETFs) for the third week in four, removing a net $29.7 billion.

Taxable bond funds (+$6.0 billion), alternative investments (+$571 million), and tax-exempt bond funds (+$415 million) reported weekly inflows.

Money market funds (-$35.3 billion), equity funds (-$1.0 billion), commodities funds (-$207 million), and mixed-assets funds (-$168 million) suffered outflows over the week.

Money market funds reported their second-largest weekly outflow since the start of the year, as they see their third outflow in four weeks.

Spot bitcoin ETFs reported net inflows of $312 million, marking the fourteenth straight weekly inflow since these launched. Grayscale Bitcoin Trust (GBTC, -$816 million) was 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 second straight week—the DJIA (-1.70%), Nasdaq (-0.66%), Russell 2000 (-2.30%), and S&P 500 (-0.98%) were in the red.

Both the Bloomberg Municipal Bond Total Return Index (-0.24%) and Bloomberg U.S. Aggregate Bond Total Return Index (-1.17%) fell over the week. The Bloomberg Municipal Bond Total Return Index has declined in four straight weeks.

Overseas indices realized negative returns as well—DAX (-2.10%), FTSE 100 (-0.13%), Nikkei 225 (-0.30%), S&P/TSX Composite (-0.75%), and Shanghai Composite (-1.33%) posted losses.

Rates/Yields

Both the two- (+6.35%) and 10-year (+4.58%) Treasury yields rose over the course of the week.

According to Freddie Mac, the 30-year fixed-rate average (FRM) increased for the second consecutive week, with the weekly average currently at 6.88%. Both the United States Dollar Index (DXY, +0.96%) and VIX (+10.82%) 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 4.5%. This tool forecasted an 18.0% 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 $5.5 billion in weekly net inflows, marking seven consecutive weeks of inflows. The macro-group posted a 1.06% loss on the week, making back-to-back weeks of declines.

Multi-cap ETFs (+3.2 billion), small-cap ETFs (+$1.6 billion) and developed international markets ETFs (+$1.1 billion) attracted the top inflows among the equity ETF subgroups. Multi-cap funds log their second largest weekly inflow over the last 52 weeks as they report the third straight week of inflows.

Large-cap ETFs (-$2.7 billion) and world sector equity ETFs (-$117 million) were the only macro-groups to suffer weekly outflows under equity ETFs. Large-cap ETFs observed their first weekly outflow in seven weeks as they see a loss of 1.00%.

Over the past fund-flows week, the two top equity ETF flow attractors were Invesco S&P 500 Equal Weight ETF (RSP, +$2.8 billion) and Energy Select Sector SPDR Fund (XLE, +$756 million).

Meanwhile, the two bottom equity ETFs in terms of weekly outflows were iShares Core S&P 500 ETF (IVV, -$3.8 billion) and Invesco QQQ Trust Series 1 (QQQ, -$872 million).

Exchange-Traded Fixed Income Funds

Exchange-traded taxable fixed income funds observed a $7.2 billion weekly inflow—the macro-group’s fifteenth inflow over the prior 16 weeks. Fixed income ETFs reported a loss of 0.40% on average, their third sub-zero return in four weeks. This was the largest weekly inflow since the week ending February 14, 2024.

Short/intermediate investment-grade ETFs (+$3.5 billion), short/intermediate government & Treasury ETFs (+$1.4 billion), and government & Treasury ETFs (+$1.0 billion) were the top subgroups under taxable bond ETFs to observe inflows. Short/intermediate investment-grade ETFs see a record-setting week of inflows while returning a negative 0.75% on average.

No subgroups reported weekly outflows under fixed income ETFs.

Municipal bond ETFs reported a $809 million inflow over the week, marking the group’s second weekly inflow in three. Municipal bond ETFs have suffered from four straight weeks of negative returns.

iShares Core US Aggregate Bond ETF (AGG, +$1.0 billion) and Fidelity Total Bond ETF (FBND, +$968 million) attracted the largest amounts of weekly net new money for taxable fixed income ETFs.

On the other hand, iShares iBoxx $Investment Grade Corporate Bond ETF (LQD, -$1.5 billion) and Grayscale Bitcoin Trust (GBTC, -$816 million) suffered the largest weekly outflows under all taxable fixed income ETFs.

Conventional Equity Funds

Conventional equity funds (ex-ETFs) witnessed weekly outflows (-$6.4 billion) for the one-hundred-and-thirteenth straight week. Conventional equity funds posted a weekly return of negative 1.00%, the second week of realizing a loss over the last 10.

Large-cap (-$2.0 billion), multi-cap funds (-$1.5 billion), and mid-cap funds (-$827 million) were the top conventional equity fund subgroups to realize weekly outflows. Large-cap conventional mutual funds witnessed their seventeenth consecutive week of outflows.

Small-cap (+$495 million) mutual funds was the only subgroup posted weekly net inflows. This was the first weekly inflow over the last three weeks.

Conventional Fixed Income Funds

Conventional taxable-fixed income funds realized a weekly outflow of $1.1 billion—marking only their second weekly outflow in 15 weeks. The macro-group logged a negative 0.73% on average—their fourth weekly decline in five.

Short/intermediate government & Treasury funds (+$140 million) and alternative bond funds (+$5 million) were the only subgroups to post inflows on the week. Short/intermediate government & Treasury funds have seen five weekly inflows in the last six.

High yield funds (-$546 million), short/intermediate investment-grade funds (-$231 million), and government & Treasury funds (-$187 million) were the top taxable fixed income mutual fund subgroups to post weekly net outflows. Conventional high yield mutual funds have reported three weeks of outflows over the prior four.

Municipal bond conventional funds (ex-ETFs) returned a negative 0.19% over the fund-flows week, giving the subgroup four consecutive weeks of losses. Tax-exempt fixed income mutual funds experienced a $364 million outflow, marking the second week of outflows in the last three.

Sources:

Data/Charts – “LSEG Lipper”  

Commentary – “Jack Fischer, Senior Research Analyst, LSEG Lipper

For more information about Lipper fund performance data, please contact me or newsroom@lseg.com.

Learn more about the London Stock Exchange Group (LSEG).

Best,

Elizabeth

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The post above is drafted by the collaboration of the Hedge Fund Alpha Team.