(Recasts with break in long streak of inflows; adds uncertainty
about the data due to fund merger).
By Hilary Russ
July 7 Investors pulled a net $46.9 million out
of U.S. municipal bond funds in the week ended July 6, breaking
a nearly 10-month streak of consecutive weekly inflows,
according to data released by Lipper on Thursday.
But it was not immediately clear whether the data was
affected by American Funds' merger of two of its state funds
into a broader fund.
Investors have been pouring money into muni bond funds for
months, seeking relative stability and investment-grade quality
as well as any yield they can get because interest rates
globally are so low.
Strong inflows were expected to continue, especially with
big coupon payments on July 1 that normally lead to
reinvestment.
Munis also benefited from the post-Brexit market shock, when
investors dumped stocks and snatched up safe-haven assets
following Britain's vote to leave the European Union on June 23.
The day after the referendum, the yield on top-rated 30-year
muni bonds plummeted by 15 basis points to close at 2.08
percent.
Since then, it has continued to break records, closing at an
all-time low of 1.93 percent on Wednesday amid strong investor
demand that has far outweighed supply.
But in Thursday's data, several American Funds appeared to
lose more than $700 million combined due to negative flows.
However, those funds - specifically state funds for Maryland and
Virginia bonds - were merged into its Tax-Exempt Bond Fund of
America as of June 17, according to a company press
release.
Spokesmen for Lipper and American Funds said on Thursday
that they were still looking into the fund flows.
So far this year, muni funds have had $31.5 billion of
inflows, and the four-week moving average remained positive at
$753.9 million, according to Lipper, a Thomson Reuters unit.
Investors moved out of long-term funds and into high-yield
funds in the last week, with $409.9 million of outflows versus
$200.7 million of inflows, respectively. Intermediate funds also
had net inflows, the data showed.
(Reporting by Hilary Russ in New York; Additional reporting by
Karen Pierog in Chicago; Editing by Leslie Adler).
U.S. muni bond funds post outflows, but merger impact unclear
Industry: Financial services 2016-07-08
Source: Reuters.com
