August 28, 2013 / 6:52 PM / 6 years ago

U.S.-based bond funds post biggest outflow in eight weeks - ICI

(Adds additional flows)

By Sam Forgione

NEW YORK, Aug 28 (Reuters) - Investors in mutual funds based in the United States pulled $11.15 billion out of bond funds in the latest week, marking the biggest outflow from the funds in eight weeks, data from the Investment Company Institute showed on Wednesday.

The outflows from bond funds in the week ended Aug. 21 were the biggest since the week ended June 26, when investors pulled a record $28.2 billion out of the funds, data from ICI, a U.S. mutual fund trade organization, showed.

The latest outflows also marked the fourth straight week in which investors have pulled cash out of bond funds. Fears that the U.S. Federal Reserve will start scaling back its $85 billion in monthly bond purchases next month led investors to sell bonds over the weekly period.

Benchmark U.S. Treasury yields, which move inversely to prices, hit two-year highs over the weekly period. Positive U.S. economic data reinforced fears of a pullback in stimulus, while investors anxiously awaited the release of the Fed’s July meeting minutes at the end of the weekly period.

Stock funds, meanwhile, took in $1.33 billion over the weekly period, down modestly from inflows of about $1.5 billion but still marking the 10th straight week of inflows into the funds.

Continued demand for funds that hold non-U.S. stocks accounted for the overall inflows. Those funds attracted $1.72 billion in new cash, down from inflows of $2.26 billion the prior week.

Investors pulled $387 million from funds that hold U.S. stocks, meanwhile, marking an improvement after outflows of $760 million the prior week. The S&P 500 .SPX fell 2.53 percent over the period on fears of a pullback in the Fed's stimulus.

Hybrid funds, which can invest in stocks and fixed income securities, attracted $1.1 billion in new cash, marking the smallest inflow into the funds in seven weeks.

The following is a breakdown of estimated ICI flows for the past five weeks (all figures in millions of dollars) :

7/24/13 7/31/13 8/7/2013 8/14/2013 8/21/2013 Total Equity 4,209 713 3,411 1,498 1,332

Domestic 2,728 -933 357 -760 -387

World 1,481 1,646 3,055 2,259 1,718 Hybrid* 2,056 1,739 1,329 1,598 1,100 Total Bond 2,159 -6,970 -2,090 -3,908 -11,149

Taxable 4,170 -4,097 35 -1,823 -7,381

Municipal -2,011 -2,873 -2,126 -2,086 -3,768 Total 8,425 -4,519 2,650 -812 -8,717 *Hybrid funds can invest in stocks and/or fixed income securities

(Reporting by Sam Forgione; Editing by Chizu Nomiyama, Bernard Orr)

(( Messaging: Keywords: INVESTING FUNDFLOWS/ICI

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