U.S. bond funds show weak turnout as munis suffer -ICI
By Sam Forgione NEW YORK, Dec 26 (Reuters) - Investors in U.S.-based mutual funds committed the least amount of new cash to bond funds in six months and shunned municipal bonds in the latest week as U.S. lawmakers hit a standstill in talks over the looming "fiscal cliff," data from the Investment Company Institute showed on Wednesday. Investors gave just $431 million to bond funds in the week ended Dec. 19, said ICI, a U.S. mutual fund trade organization. The modest inflows mark the weakest turnout for the funds since suffering outflows at the end of May. Funds that hold municipal bonds, meanwhile, had outflows of $3.26 billion, which is the most withdrawn from the funds this year. In the prior week, the funds attracted inflows of $211 million. Investors have become wary of municipal bonds in recent weeks in light of potential federal tax reforms being discussed in Washington that could alter the tax-exempt status of the securities. The benchmark S&P 500 stock index rose 0.51 percent over the reporting period despite gridlock between U.S. President Barack Obama and U.S. Republican House Speaker John Boehner in talks to avert the "fiscal cliff" of tax hikes and spending cuts set to occur early next year. Investors withdrew a net $4.93 billion from stock funds over the period, showing less aversion to the funds after redeeming $8.48 billion the previous week. Hybrid funds, which can invest in stocks and fixed income securities, attracted just $11 million in new cash over the period after pulling in $119 million the prior week. The following table is a breakdown of ICI flows for the past five weeks (all figures in the millions of dollars): 11/20/12 11/28/12 12/5/12 12/12/12 12/19/2012 Total Equity -8,818 -626 -7,180 -8,478 -4,932 Domestic -7,504 -613 -5,858 -7,232 -5,224 World -1,314 -13 -1,321 -1,246 292 Hybrid* -1,197 144 -71 119 11 Total Bond 4,397 4,255 5,165 1,787 431 Taxable 3,031 2,956 4,092 1,576 3,694 Municipal 1366 1,299 1,074 211 -3,263 Total -5,618 3,772 -2,085 -6,572 -4,490 *Hybrid funds can invest in stocks and/or fixed income securities.