Dow Jones Drops 400-US Fund Flow Data
Below are this past week’s U.S. fund flow data.
For the fund-flows week ended Wednesday, October 1, the U.S. broad market indices experienced significant losses. The S&P 500 Index shed 2.62% (-52.14 points) and the Dow Jones Industrial Average retreated 2.36% (-405.35 points). The week came in like a lion and went out like a lion, with both indices experiencing the overwhelming majority of their losses during the first and last trading sessions of the week.
The highlight of the week’s market news was the announcement that Bill Gross was leaving PIMCO, the firm he helped found over 40 years ago, for Janus Capital Group. On Friday, September 26, Janus issued a press release stating Mr. Gross would be joining the firm effective Monday, October 6, to run the recently launched Janus Unconstrained Bond Fund (JUCAX) and other global macro strategies. This announcement brought to an end months of infighting at PIMCO, during which time the heir apparent to Gross (Mohamed El-Erian) resigned from the firm. Since its peak in April 2013 (when it had over $292 billion in assets under management) the Bill Gross-managed PIMCO Total Return Bond Fund (PTTRX) had net outflows of almost $95 billion, including $23.5 billion of net outflows for September, the largest monthly outflows ever for the fund. To put the September number in perspective, during the fund’s 16-month downturn directly preceding (May 2013–August 2014) the monthly net outflows averaged only $4.3 billion. PIMCO confirmed that the largest daily net outflow for the fund occurred on the day of the announcement.
In fund-flows activity the four Lipper fund macro-groups had overall (aggregating mutual funds and exchange-traded funds ) net inflows of $10.3 billion for the week. Money market funds, with net inflows of $18.9 billion, contributed the most to the overall gains. Taxable money market funds, with $18.3 billion in positive flows, represented the bulk of the net inflows for the week for the group. It appears a sizeable portion of the PIMCO outflows were parked in money markets for the time being.
Taxable bond funds took in $1.6 billion for the week. Taxable bond mutual funds (+$2.7 billion) represented all of the net inflows, while taxable bond ETFs had $1.1 billion of net outflows. On the mutual fund side investors injected money into intermediate investment-grade debt funds (+$3.3 billion), while fleeing high-yield funds (-$2.2 billion). Drilling down to the fund level, it appeared that MetWest Total Return Fund (MWTIX) and DoubleLine Total Return Fund (DBLTX) benefitted from the news from PIMCO, with net inflows of $1.2 billion and $647 million, respectively. Of note on the ETF side PIMCO Total Return Exchange-Traded Fund (BOND) had $653 million of net outflows, the second largest of the group.
After seven straight weeks of net inflows equity funds saw $10.3 billion leave their coffers this past week. Both equity mutual funds (-$3.8 billion) and equity ETFs (-$6.6 billion) participated in the outflows. SPDR S&P 500 ETF Trust (SPY) paced the ETF outflows at $2.8 billion, while PowerShares QQQ Trust (QQQ) contributed $2.1 billion of negative net flows. For equity mutual funds the net outflows were fairly evenly split between domestic (-$2.1 billion) and nondomestic (-$1.7 billion) funds.
Municipal bond funds experienced positive net flows of $237 million, for the group’s thirteenth consecutive week of inflows. Once again the national muni categories led the charge, with gains of $213 million.
Patrick Keon of Lipper
