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

October 10, 2013


WASHINGTON, Oct 10 (Reuters) - U.S. municipal bond funds reported $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 pulled money from the funds, and the largest outflow since the week ended Sept. 18.

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

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

In May municipal bond interest rates began to rise and investors pulled money out of the funds. Now, as rates continue to increase, investors are also growing concerned about Puerto Rico's fiscal situation. Many of the funds have loaded up on the territory's bonds, which are exempt from federal, state and local taxes, and could be exposed to risks from its current budget problems.

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