Outflows from muni bond funds rise to $729.5 mln -Lipper

Reuters

WASHINGTON, Oct 10 (Reuters) - U.S. municipal bond fundsreported $729.5 million of net outflows in the week ended Oct.9, up from $690 million of outflows in the previous week,according to data released by Lipper on Thursday.

It was the 20th week in a row that investors have pulledmoney from the funds, and the largest outflow since the weekended Sept. 18.

The four-week moving average remained negative at $670million, said Lipper, a unit of Thomson Reuters.

Investors pulled $85.53 million from high-yield municipalfunds, which had seen inflows of $33.22 million in the weekended Oct. 2. Exchange-traded funds had their eighth week ofoutflows - $16.1 million after $14.1 million the prior week.

In May municipal bond interest rates began to rise andinvestors pulled money out of the funds. Now, as rates continueto increase, investors are also growing concerned about PuertoRico's fiscal situation. Many of the funds have loaded up on theterritory's bonds, which are exempt from federal, state andlocal taxes, and could be exposed to risks from its currentbudget problems.

Meanwhile, BondDesk Group LLC reported that retail investorsbought two municipal bonds for every one they sold in the weekended Oct. 9, down from 2.3 during the previous week. The numberof bonds bought totaled 68,897, while the number of bonds soldwas 34,141.

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