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This week’s $1.2B high yield fund outflow all but wipes out 2013 cash inflows

Data from EPFR Global show a $1.2 billion cash outflow from U.S.-domiciled high-yield mutual funds and exchange-traded funds in the week ended Feb. 6, by the weekly reporters only. That is the largest outflow in 12 weeks and nearly wipes out the year-to-date inflow.

It is the second straight outflow following a considerably milder negative $117 million that was posted last week, and is the third of six weeks this year. As was the case last week, outflows were fueled heavily by ETFs. The ETF-only component showed a $1.06 billion outflow against a $141 million outflow for mutual funds, which was the first since the beginning of the year.

As noted previously, that ETF activity is consistent with daily-reporter readings, which could suggest that it’s fast money exiting the asset class, rather than long-term investors capitulating on the sector, even considering the more modest ex-ETF outflow. Such a dynamic hasn’t occurred since the week ended Nov. 7, 2012, right before the market slumped hard into the most recent trough.

With the large outflow, the four-week trailing average slumps to negative $89 million, from positive $441 million last week.

The year-to-date inflow is now just $228 million. That’s $1.09 billion into mutual funds against $862 million of outflows from ETFs in 2013, according to EPFR. And recall that the ETF segment accounted for one third of the $22.6 billion full-year 2012 infusion.

Total assets of the weekly-reporter sample were $194.1 billion at the end of the latest observation period, versus approximately $195.4 billion last week, which, after stripping out the outflow figure, shows a $131 million contraction during the week due to market conditions, for a 0.7% decrease in assets.

In 2012, total assets excluding cash inflows rose 32%, to $191.1 billion, and in 2011, total assets excluding cash inflows rose 18%, to $143.8 billion. – Jon Hemingway

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