Investors bought into US high-yield retail funds for a sixth straight week, and for the 12th week of the last 13, as the high-yield market fires on all cylinders in the third quarter. Morningstar reported inflows of $671 million for the week to Sept. 25, including a $1.03 billion inflow to mutual funds. Partially offsetting that was a $359 million redemption in exchange-traded funds, which followed a spree of ETF buying (roughly $4.5 billion cumulatively) over the previous five weeks.
While the overall four-week rolling average moderated (to positive $898 million, from positive $1.04 billion to Sept. 18 and positive $1.06 billion to Sept. 11), that metric has been in positive territory now for 20 straight weeks, since May 9.
Net flows are positive $13.41 billion for the quarter (across inflows of $7.69 billion for mutual funds and $5.72 billion for ETFs), and they are positive $26.83 billion for the year (weighted to $15.53 billion to mutual funds and $11.30 billion to ETFs). That’s after three straight years of outflows ($3.87 billion last year, $29.69 billion in 2022, and $3.95 billion in 2021).
Fund valuations are climbing as the Fed pivots to rate cuts. Morningstar valued the funds at $297.1 billion as of Sept. 25, up $1.22 billion week to week and up $41.45 billion for the year. The latest reading is within $2 billion of the all-time high, recorded at the end of 2021. Last year, Morningstar recorded a 2023 low at $223.4 billion in late October, just ahead of the Fed’s dovish turn at the November FOMC meeting.
That latest valuation reflects $86.5 billion of ETFs (29% of the total pool) and $210.6 billion of mutual funds.
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