Investors were overall net buyers of fund assets (including those of conventional funds and ETFs) for the first week of three, removing $20.2 billion net for the week from Refinitiv Lipper fund flows ended March 9, 2022. Fund investors were net buyers of equity funds (+$12.5 billion) while being net redeemers of money market funds (-$26.2 billion), taxable bond funds (-$5.8 billion) and tax-exempt fixed income funds (-$662 million) for the week.
Markets were rocked during the week of fund flows as investors considered the impacts that soaring commodity prices, the Russian-Ukrainian conflict and Federal Reserve policies could have on the global economy and markets. . Market correction territory has entered, down 11% from its record high on Jan. 4, while bear market territory has entered, down more than 20% from its November 2021 highs in funds flow during the week.
After a strong one-day market rally on Wednesday, March 9, on the domestic side of the equation, the Dow Jones Industrial Average Price Only Index (-1.79% for the week and down 8.40% since the beginning of the year) mitigated losses better than the other widely tracking US indexes for the week of cash flows as investors sought some semblance of safety in this volatile time. It was followed by the price index only (-2.07% and -10.20%, respectively). The NASDAQ Composite Price Only Index (-3.61% and -15.27%, respectively) posted the biggest weekly drop of any other US index for the week. Overseas, the Xetra Total Return Index (-1.29% and -15.32%, respectively) mitigated losses better than other often-tracked broad-based international indices, while the Price Only Index ( -6.62% and -9.72%, respectively) was the trailing group.
On Thursday, March 3, 2022, all three US indices ended the day lower as the Russian incursion into Ukraine entered its second week. Investors were keeping a close eye on how international sanctions against Russia could impact domestic politics. Speaking to the Senate Banking Committee, the Fed Chairman indicated that he would still recommend a 25 basis point (bp) increase in the Fed’s benchmark interest rate. Powell, however, left the door open to more aggressive hikes if that doesn’t calm down. The first time fell from 18,000 to 215,000 in the last week of February, while the Institute for Supply Management said its February gauge fell to a one-year low of 56.5% against 61% expected by analysts. First-month prices saw a slight decline, closing the day at $110.46 per barrel (bbl.) and remained unchanged, closing at 1.86%.
The DJIA fell for the fourth straight week on Friday, March 4, as investors focused on the escalating conflict between Russia and Ukraine. Commodity prices have soared as sanctions on Russia are likely to cause disruptions in oil, petroleum and grain supplies. The Russian invasion overshadowed a strong February report. The US Bureau of Labor Statistics reported that the US economy added 678,000 new jobs in February, beating analysts’ expectations of 444,000. The pullback was 3.8%. Oil prices remained higher, with the West Texas Intermediate Crude rising 7.4%, closing at 115.68/bbl. The 10-year Treasury yield fell 12 basis points to 1.74% as investors turned to safe-haven assets.
The DJIA fell nearly 800 points on Monday, March 7, ending in corrective territory as the Russian-Ukrainian conflict escalated and oil hit multi-year highs as the White House still considered a decision. ban energy imports from Russia. Hostilities continued as ceasefire talks broke down and an estimated 1.7 million refugees fled to neighboring countries. Grain and oil prices continued to climb as the conflict halted exports from the Black Sea region. First-month crude oil futures hit their highest levels in more than 13 years to settle at $119.40/bbl.
The three major U.S. indices recorded their fourth consecutive day of declines on Tuesday, March 8, as investors weighed the impact of a ban on Russian imports. US President Joe Biden has announced a ban on Russian oil imports in retaliation for Moscow’s invasion of Ukraine. First-month crude oil prices rose 3.6% to $123.70/bbl, its highest closing value since August 1, 2008, and gold futures first month closed up 2.4% to settle at $2,043.30/oz. The 10-year Treasury yield jumped 10 basis points to 1.86% as inflation remained a major concern.
On Wednesday, March 9, 2022, the best one-day return since June 2020 was posted, as stocks rose, halting a four-day decline, oil fell and investors awaited news on talks between the Ukraine and Russia. The day-long gathering took place after the Russian and Ukrainian foreign ministers agreed to meet in Turkey to find diplomatic solutions to the ongoing hostilities. US lawmakers unveiled a new bill that would fund the government for the rest of the year and provide additional aid to Ukraine. First-month crude oil futures fell to $108.70/bbl, while gold futures settled at $1,985.90/oz. The 10-year Treasury yield rose eight basis points to close the day at 1.94%
Exchange Traded Equity Funds
Equity ETFs enjoyed their fifth consecutive week of net inflows, attracting $18.7 billion for the most recent week of fund inflows. Authorized participants (AP) were net buyers of domestic equity ETFs (+$19.3 billion), also pumping money for the fifth straight week. However, for the first week in three, non-domestic equity ETFs saw net outflows, returning $622 million last week. Large-cap ETFs (+$8.7 billion) attracted the most net new funds, followed by other commodity-heavy ETFs (+$5.1 billion) and small-cap ETFs (+3.5 billion dollars). Meanwhile, financial/banking sector ETFs (-$1.9 billion) suffered the largest net redemptions of the equity ETF macro groups for the week of flows.
SPDR S&P 500 ETF (, +$4.0 billion) and iShares Russell 2000 ETF (, +$2.6 billion) attracted the largest amounts of net new funds of any individual equity ETF. At the other end of the spectrum, SPDR Selected Financial Sector ETFs (, -$913 million) saw the largest individual net redemptions, and iShares U.S. Real Estate ETF (, -$600 million) suffered the second largest net redemptions of the week.
Fixed Income Exchange Traded Funds
For the third straight week, taxable fixed income ETFs saw net inflows. However, they only made $446 million last week. APs were net buyers of Treasury ETFs (+$2.7 billion) and international and global debt ETFs (+$511 million), while being net buyers of US debt ETFs. investment grade (-$1.4 billion), high yield corporate ETFs (-$1.2 billion) and government mortgage ETFs (-$229 million). ETF iShares JPM USD Emerging Markets Bond (, +$712 million) and PGIM Ultra-Short Bond ETF (, +$616 million) attracted the largest amounts of net new funds of any individual taxable fixed income ETF. Meanwhile, iShares iBoxx $ Investment Grade Corporate Bond ETF (, -$1.3 billion) and iShares Core US Aggregate Bond ETF (, -$578 million) returned the biggest individual net redemptions of the week.
For the fifth week in six, municipal bond ETFs saw net inflows, with investors pumping in $572 million this week. JP Morgan Ultra-Short Municipal Income ETF (, +$507 million) witnessed the largest drawdown of net new funds from municipal bond ETFs, while SPDR Nuveen Bloomberg Municipal Bond ETF (, -$103 million) saw the subgroup’s largest net redemptions for the week.
Conventional Equity Funds
Conventional fund (ex-ETF) investors were net sellers of equity funds for the fifth consecutive week, buying back $6.2 billion, with the macro group posting a market decline of 3.23% for the week fund flows. Domestic equity funds, suffering net redemptions of just under $4.1 billion, had their fifth consecutive week of net outflows while posting a market loss of 2.95% on average for the week. fund flows. Non-domestic equity funds – posting a weekly loss of 3.87% on average – saw their second consecutive week of net outflows, returning $2.1 billion.
On the domestic equity side, fund investors were net buyers of large-cap funds (-$3.2 billion) and mid-cap funds (-$480 million). Investors on the non-domestic equity side were net buyers of international equity funds (-$1.8 billion) and global equity funds (-$292 million) for the week.
Conventional Fixed Income Funds
For the seventh week in a row, taxable bond funds (ex-ETFs) saw net outflows – shedding $6.2 billion last week – while posting a 0.98% loss on average for the week of flows. funds. Investors were net buyers of Treasury funds (+$7m) while being net repurchasers of investment grade debt funds (-$3.9bn), flexible funds (-$725m ) and international and global debt funds (-$653 million) .
The group of municipal bond funds averaged a loss of 1.02% during the week and recorded its ninth consecutive weekly net outflows, returning $1.2 billion this week and marking its longest period of weekly net outflows since the week ended December 19, 2018. Municipal Insured Loan Funds (-$369 million) and Municipal High Yield Loan Funds (-$268 million) had the largest net outflows important to the group.