Fixed income mutual funds ended seven consecutive weeks of outflows on the strength of gains made by domestic taxable bond funds, according to a recent Morgan Stanley (NYSE:MS) report, offsetting outflows from municipal bonds caused by the fallout from Detroit’s bankruptcy.
Equity Mutual Funds
Total equity funds had inflows for the seventh straight week, and balanced funds entered their fourth week of inflows. Domestic equity continues to improve on the year with its sixth straight week of inflows, following nearly ten straight weeks of outflows. Equity mutual funds remained strong with $2.7 billion in inflows composed of $2.5 billion domestic equity and the balance in international equity mutual funds, while inflows to balanced products totaled $800 million.
Total U.S. bonds did an about face with inflows after seven straight weeks of outflow, reaching $1.7 billion driven primarily by U.S. taxable fixed bonds that grew $2.7 billion, but partially offset by the expected muni-outflows of $1 billion. Flows from international taxable fixed income funds were roughly flat this week.
U.S. Aggregate Mutual Funds
Total mutual funds saw outflows after three consecutive weeks of inflows, while money market funds had outflows after 4 straight weeks of inflows. Long-term funds entered their fourth straight week of inflows, with inflows for 24 of the past 29 weeks. Overall, mutual funds had $3.5 billion in outflows as the $8.7 billion in money market outflows drowned out gains made by long-term funds.
Weekly U.S. ETF Flows
Total ETF flows and equity ETF flows both entered their fourth straight week of inflows, and both have been positive for 25 of the last 33 weeks. Bond ETF flows entered their second week of inflows, moving away from its trend of outflows for 7 of the past 11 weeks. Total inflows reached $3.8 billion, driven by equity ETF.
Long-Term Mutual Fund + ETF Flow Highlights
Long-term mutual funds saw their fourth straight week of inflows alongside equity mutual fund + ETF flows, while bond mutual funds + ETF flows gained after two weeks of outflows. The total gains to long-term products hit $9 billion, driven by the $5.5 billion surge in equity products.
Morgan Stanley’s Fund Flows report was compiled by Matthew Kelley, Thomas Whitehead, and Elizabeth Elliott.