September 11, 2013 / 7:33 PM / in 4 years

Investors pull $6.8 bln from U.S.-based bond funds - ICI

By Sam Forgione
    NEW YORK, Sept 11 (Reuters) - Investors pulled $6.8 billion
out of U.S.-based bond mutual funds in the latest week, marking
the sixth straight week of outflows from the funds as selling
pressure on bonds continued, data from the Investment Company
Institute showed on Wednesday. 
    The outflows in the week ended Sept. 4 were down from
investor withdrawals of $9.3 billion the prior week, according
to data from ICI, a U.S. mutual fund trade organization. 
    The outflows showed a persistent flight out of bonds. Data
showing upwardly revised U.S. economic growth and strength in
manufacturing bolstered expectations that the U.S. Federal
Reserve will soon start reducing its $85 billion in monthly bond
purchases. 
    Investors have fled bonds on fears that a pullback in the
Fed's stimulus will cause interest rates to spike higher, which
would weaken bond prices. The Fed's bond-buying has been a major
source of support for both stock and bond markets this year.
    Investors pulled $2.05 billion out of municipal bond funds
in the latest week, down from outflows of $2.9 billion the prior
week but still marking the 15th straight week of outflows.
    Stock funds, meanwhile, attracted $904 million in new cash
over the weekly period. Inflows of $1.6 billion into funds that
hold non-U.S. stocks, a modest increase from the prior week,
accounted for the total inflows.
    Funds that hold U.S. stocks had outflows, meanwhile, of $694
million, marking the fourth straight week of outflows. The
outflows came despite a 1.1 percent rise in the benchmark S&P
500 stock index on the strong U.S. economic data.
    Hybrid funds, which can invest in stocks and fixed income
securities, had inflows of just $263 million, marking the
smallest inflows into the funds in 10 weeks. 
    The following table shows estimated ICI flows for the past
five weeks (all figures in millions of dollars):
               8/7/13  8/14/13   8/21/2013  8/28/2013   9/4/2013
 Total Equity   3,609    1,512       1,338       -212        904
    Domestic      552     -766        -384     -1,351       -694
    World       3,057    2,278       1,722      1,138      1,597
 Hybrid*        1,328    1,588       1,106      1,148        263
 Total Bond    -2,084   -3,881     -11,142     -9,303     -6,766
    Taxable        43   -1,793      -7,374     -6,390     -4,718
    Municipal  -2,127   -2,088      -3,769     -2,913     -2,048
 Total          2,853     -782      -8,698     -8,367     -5,599
 *Hybrid funds can invest in stocks and/or fixed income
securities.

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