UPDATE 1-U.S. muni bond funds post outflows for 5th straight week

Thu Apr 4, 2013 5:15pm EDT

April 4 (Reuters) - Net outflows for U.S. municipal bond funds extended to a fifth consecutive week, growing to $278 million in the week ended April 3, according to data released by Lipper on Thursday.

The latest outflow was more than six times higher than the $43 million of outflows in the previous week and the highest during the last five weeks.

The four-week moving average was a negative $173.6 million, said Lipper, a unit of Thomson Reuters.

Chris Mier, a managing director at Loop Capital Markets, said he expects "a slow leak" out of long-term and maybe intermediate-term muni funds to continue.

"I think it's kind of an asset allocation process," he said, noting investors were bailing out of low-yielding munis and putting their money into the stock market.

High-yield muni funds reported $41.3 million of net outflows in the latest week after posting $16.7 million of inflows in the week ended March 27.

The four-week moving average for high-yield muni funds remained negative at $36.1 million.

However, exchange-traded muni funds had net inflows of $2.7 million in the latest week, after reporting net outflows of $4.9 million in the prior week, Lipper said.

Meanwhile, retail investors bought 1.8 muni bonds for every one they sold in the week ended April 3, unchanged from the previous week, according to BondDesk Group.

The number of bonds bought totaled 48,508, while the number of bonds sold was 27,311.

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