J.P. Morgan’s weekly analysis of European high-yield funds shows a €747 million inflow for the week ended March 23. The reading includes a €254 million inflow for ETFs, and a €27 million outflow for short duration funds. The reading for the week ended March 16 is revised from a €1.089 billion inflow to a €1.11 billion inflow. Note, the net weekly reading also includes flows for managed accounts.
The provisional reading for February is an €824 million outflow. A €1.31 billion outflow was tracked in January, which is the second-largest monthly outflow number recorded (the largest being a €2.2 billion outflow in June 2013). February’s reading also marks the third consecutive monthly outflow, which is the longest losing run since LCD began looking at J.P. Morgan’s records in 2011. Outflows for 2016 are €2.2 billion, while this time last year there had been just over €4 billion of inflows.
The latest reading is the fifth consecutive weekly inflow, and follows the third-largest weekly inflow on record last week. By the weekly reporters, March has seen roughly €2.7 billion of inflows, which will tip the 2016 number back into positive territory. This influx of cash though is not being met by a wall of decent-yielding primary supply. Rather, the last fortnight has seen accounts served a diet of largely sub-4% deals. It is also hard for managers to source paper in size in secondary, meaning this new cash is struggling to find a decent home. Interestingly short-duration paper saw an outflow during the last week, indicating money is perhaps moving away from the more defensive strategy and into longer-dated supply.
Meanwhile, U.S. high-yield funds recorded an inflow of $2.2 billion in the week ended March 23, according to Lipper. This is the sixth consecutive infusion of fresh retail cash, for a net inflow of $13.4 billion over that span, which includes the record $5 billion that was ploughed into the asset class three weeks ago. The influence of ETFs was impressive this past week, at 72% of the total or roughly $1.5 billion, up from 38% in the prior week.
J.P. Morgan only calculates flows for funds that publish daily or weekly updates of their net asset value and total fund assets. As a result, its weekly analysis looks at around 60 funds, with total assets under management of €50 billion. Its monthly analysis takes in a larger universe of 90 funds, with €70 billion of assets under management. For a full analysis, please see “Europe receives HY fund flow calculation.”$ — Luke Millar
This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.