Mutual Fund Flows

May 29th, 2014 8:20 pm | by John Jansen |

Bank America Merrill Lynch reports heavy flows into fixed income bond funds with flows into those funds totaling $19 billion over the last four weeks. Equity based mutual funds suffered $ 7 billion of outflows in that same period.

Via Merrill Lynch Research:

  • More buying of duration. As interest rates continue to decline, mutual fund and ETF investors continue to buy bond funds in the typical fashion of flows following returns. Hence, over the last four weeks as 10-year Treasury yields declined 20bps, inflows into fixed income funds totaled $19bn. Stocks, on the other hand, saw $7bn in outflows over the same period, suggesting some reverse rotation out of stocks and into bonds. On a week over week basis inflows rose last week for high grade outside of short-term funds, EM and Muni funds – the asset classes with significant duration exposure. At the same time flows where flat or lower for bond funds with low duration exposure, such as high yield, loans and short-term high grade.
  • Hence, inflows to high grade bond funds rose last week to $1.66bn, including a $1.21bn inflow outside of short-term funds. Inflows to EM and Munis were $1.12 and $0.65bn, respectively. At the same loan fund outflows accelerated last week to $0.47bn from a $0.36bn outflow in the prior week. Inflows to high yield have remained flat at $0.72bn. All fixed income funds, a category that also includes government and mortgage funds, had a $2.98bn inflow last week. Stock funds also had an inflow of $1.61bn, up from a $7.10bn outflow in the prior week. Finally, money market funds reported a $4.63bn inflow following flows that were close to flat in the prior two weeks – Yuriy Shchuchinov  (Page 4)
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