U.S. bond funds gain most in 3 weeks ahead of budget deal -ICI

Wed Jan 2, 2013 5:56pm EST

NEW YORK, Jan 2 (Reuters) - Investors in U.S.-based mutual
funds committed the most money to bond funds in three weeks
ahead of final discussions in Washington surrounding the "fiscal
cliff" of tax hikes and spending cuts, data from the Investment
Company Institute showed on Wednesday.
    Investors poured an estimated $2.46 billion into bond funds
in the week ended Dec. 26, more than five times the previous
week's inflows of $427 million, said ICI, a U.S. mutual fund
trade organization.
    Stock funds, meanwhile, had net outflows of $3.27 billion,
an improvement from the prior week when the funds suffered
outflows of $5 billion. 
    The benchmark S&P 500 index fell 1.1 percent over the
reporting period as U.S. lawmakers remained in gridlock over the
fiscal cliff, which President Barack Obama and Congress averted
this week with a compromise. The S&P surged 2.54 percent on
Wednesday in the first day of U.S. trading since the deal was
    Municipal bond funds still posted outflows, but the tide
eased, with outflows of $685 million, down from the prior week's
outflows of $3.26 billion. 
    Hybrid funds, which can invest in stocks and fixed income
securities, gained $757 million in new cash, the most since the
week ended Oct. 24 and following outflows of $20 million the
previous week.
    The following table shows a breakdown of ICI flows for the
past five weeks (all figures in millions of dollars) :
               11/28/12  12/5/12  12/12/12  12/19/12  12/26/2012
 Total Equity      -632   -7,180    -8,479    -4,996      -3,274
    Domestic       -619   -5,858    -7,233    -5,284      -3,637
    World           -13    -1321    -1,246       289         363
 Hybrid*            144      -71       119       -20         757
 Total Bond       4,255    5,157     1,787       427       2,457
    Taxable       2,956    4,084     1,576     3,690       3,141
    Municipal     1,299     1074       211    -3,263        -685
 Total            3,766   -2,093     -6572    -4,590         -61
 *Hybrid funds can invest in stocks and/or fixed income
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