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U.S.-based bond funds attract $831 million in latest week -ICI
October 1, 2014 / 3:02 PM / 3 years ago

U.S.-based bond funds attract $831 million in latest week -ICI

By Sam Forgione
    NEW YORK, Oct 1 (Reuters) - Investors in U.S.-based mutual
funds committed a net $831 million to bond funds in the week
ended Sept. 24 on continued appetite for tax-free municipal
debt, data from the Investment Company Institute showed on
    The inflows came after investors pulled $755 million from
bond funds the prior week, which were the first outflows in six
weeks, according to data from ICI, a U.S. mutual fund trade
organization. Stock funds attracted a meager $70 million, still
marking the third straight week of inflows. 
    Most of the new money flowing into bond funds went toward
those that hold municipal bonds, which attracted $810 million.
That marked their 11th straight week of new demand. 
    "This is just a yield-chasing play," said David Keeble,
global head of fixed income strategy at Credit Agricole in New
York. He said investors continued to favor tax-free municipal
bond yields over low yields on taxable U.S. Treasuries.
    Keeble also said relatively stable U.S. home prices were
propping up revenue in U.S. municipalities, making municipal
bonds a more attractive investment.
    Funds that specialize in U.S. stocks posted $1.5 billion in
outflows, their fifth straight week of withdrawals, while funds
that focus on international stocks continued their streak with
over $1.5 billion in inflows. 
    The benchmark S&P 500 stock index fell a slight 0.2
percent during the reporting period, partly on concerns of an
economic slowdown in China and weak European economic data. The
Barclays U.S. Aggregate Bond Index rose just 0.2 percent. 
    Analysts have said that investors have favored cheaper
international stocks in recent weeks over U.S. shares, which
have hit multiple record highs this year.
    Hybrid funds, which can invest in stocks and fixed income
securities, attracted $856 million, up from the prior week's
modest inflows of $179 million and marking the funds' seventh
straight week of new demand. 
    The following table shows estimated ICI flows for the past
five weeks (all figures in millions of dollars):
                      9/24/2014    9/17     9/10     9/3    8/27
 Total equity                70     123    1,256  -4,022    -568
    Domestic             -1,478  -2,017   -1,292  -5,306  -2,199
    World                 1,548   2,140    2,548   1,284   1,631
 Hybrid*                    856     179    1,055     542     943
 Total bond                 831    -755    1,553   2,481   3,666
    Taxable                  21  -1,272      711   1,824   2,928
    Municipal               810     517      843     657     739
 Total                    1,757    -453    3,865    -999   4,041
 *Hybrid funds can invest in stocks and/or fixed income

 (Reporting by Sam Forgione; Editing by Dan Grebler)

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