September 11, 2013 / 7:38 PM / 4 years ago

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

NEW YORK (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 September 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 .SPX 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.

Reporting by Sam Forgione; Editing by James Dalgleish

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