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U.S.-based bond funds post biggest two-week outflows of year -ICI
August 12, 2015 / 5:13 PM / 2 years ago

U.S.-based bond funds post biggest two-week outflows of year -ICI

By Sam Forgione
    NEW YORK, Aug 12 (Reuters) - Investors in U.S.-based mutual
funds pulled $4.4 billion out of bond funds in the week ended
Aug. 5 to mark the biggest investor withdrawals over two
consecutive weeks so far this year, data from the Investment
Company Institute showed on Wednesday.
     The latest outflows, marking the second straight week of
outflows, were only modestly lower than the prior week's $4.8
billion, which were the biggest weekly outflows since
mid-December. 
    Funds that specialize in U.S. stocks posted $7.3 billion in
outflows to mark their biggest outflows in three weeks,
according to the data from ICI, a U.S. mutual fund trade
organization. The funds have posted outflows every week since
early March. 
    Funds that specialize in international shares attracted $3.5
billion in new cash to continue their streak of inflows, which
began at the start of the year. Overall, stock funds posted $3.8
billion in outflows to mark their second straight week of
withdrawals and their biggest in three weeks.  
    Investors likely pulled cash out of bond funds in the latest
week on growing anticipation of Federal Reserve interest rate
hikes, said Karyn Cavanaugh, senior market strategist at Voya
Investment Management in New York. 
    It was a mistake to abandon funds that hold safer bonds
based on Fed rate hike expectations, Cavanaugh said, since it
showed investors not putting enough emphasis on China's economic
slowdown.
    "The bigger concern is the second largest economy in the
world is having some issues, not a 25 basis point rate hike,"
she said. U.S. debt prices have jumped since Tuesday after a
surprise currency devaluation by China drove safety buying and
speculation that the Fed will delay an increase in rates.
 
    The U.S. benchmark S&P 500 slipped 0.4 percent over
ICI's reporting period, while the FTSEurofirst 300 
index of top European shares rallied 2.6 percent. 
    Hybrid funds, which can invest in stocks and fixed income
securities, posted $608 million in withdrawals to mark their
biggest outflows since the first week of the year. 
    The following table shows estimated ICI flows for the past
five weeks (all figures in millions of dollars):
                8/5/2015     7/29      7/22     7/15       7/8
 Total equity     -3,844   -1,423     1,875   -7,660     2,202
    Domestic      -7,303   -5,220    -3,202  -11,468    -2,434
    World          3,459    3,798     5,077    3,808     4,636
 Hybrid*            -608      275       233     -211        66
 Total bond       -4,398   -4,813     1,563     -431    -3,164
    Taxable       -4,293   -4,722     1,322     -393    -2,877
    Municipal       -106      -91       240      -38      -288
 Total            -8,850   -5,960     3,671   -8,302      -896
 *Hybrid funds can invest in stocks and/or fixed income
securities. 
    

 (Reporting by Sam Forgione; Editing by Chris Reese)

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