J.P. Morgan’s weekly analysis of European high-yield funds shows a €254 million outflow for the week ended Oct. 7. The reading includes a €126 million net outflow from ETFs, and a €38 million net inflow for short duration funds. The reading for the week ended Sept. 30 is revised from a €323 million outflow to a €340 million outflow.
The provisional reading for September is a €696 million outflow, marking the fourth consecutive monthly outflow. August saw an outflow of €1.1 billion, the largest on record, with July and June having recorded €260 million and €702 million outflows, respectively. March’s €3.1 billion influx remains the largest monthly inflow on record. January and February both registered a €1.9 billion monthly inflow, while April’s inflow was €1.4 billion, and May’s inflow was €550 million.
Inflows for 2015 through September are €6.3 billion, versus full-year inflows of €4.15 billion and €8.94 billion in 2014 and 2013, respectively. Inflows for 2015 peaked at €9 billion through the end of May.
With secondary rallying last week, and cash balances building through coupons, a lack of primary, and some redemptions, outflows remain the most significant negative technical in the market. Still, with ETFs accounting for nearly 50% of the latest weekly outflow, versus an average 21% contribution since the start of June, there are hopes that managed accounts are seeing outflows slow. Moreover, there are signs primary issuance is re-awakening, with a £790 million two-part deal from Lowell currently marketing, and up to €700 million of secured notes expected to be launched soon from Verisure.
Retail cashflow for U.S. high-yield funds turned back into positive territory with a net inflow of $735 million in the week ended Oct. 7, according to Lipper. The inflow barely dents the $2.2 billion withdrawal the week before, but it’s the fourth inflow over the past five weeks for a net outflow of $977 million over that span. The net inflow masks an underlying dynamic that could suggest market-timing, hedging strategies, and fast-money investors in the asset class. The mutual fund segment was negative $675 million in the latest reading, but it was filled in and overblown by a whopping $1.4 billion infusion to exchange-traded funds. The full-year reading is now negative $4.3 billion, with just 7% of that ETF-related.
J.P. Morgan only calculates flows for funds that publish daily or weekly updates of their net asset value and total fund assets. As a result, J.P. Morgan’s weekly analysis looks at around 55 funds, with total assets under management of €38 billion. Its monthly analysis takes in a larger universe of 100 funds, with €52 billion of assets under management. For a full analysis, please see “Europe receives HY fund flow calculation.” –Luke Millar
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