UPDATE 2-U.S. municipal bond funds end nine-week streak of outflows

Thu May 9, 2013 6:21pm EDT

NEW YORK May 9 (Reuters) - U.S. municipal bond funds reported a net inflow of $22.1 million in the week ended May 8, ending nine consecutive weeks of outflows, according to data released by Lipper on Thursday.

But the four-week moving average remained negative for an eighth week in a row at a $251.5 million outflow, said Lipper, a unit of Thomson Reuters.

The inflow, although relatively small, ended the longest streak of outflows since 2011 which occurred as the funds were hit by competition from surging equities and tax selling by investors.

"It's a positive that it's not an outflow for the first time in nine weeks, but it's not a true vote of confidence that it's such a meager amount," said Daniel Berger, senior market strategist at Municipal Market Data, a unit of Thomson Reuters.

The week's net inflow was the smallest since November 2010.

However, flows into high-yield muni funds remained negative for a third straight week.

Funds reported $69.3 million of net outflows in the week ended May 8 compared with $73.6 million of net outflows in the week ended May 1.

Exchange-traded municipal funds reported net inflows of $40.3 million in the latest week following $52.9 million of net inflows in the prior week, according to Lipper.

Meanwhile, retail investors bought 1.7 muni bonds for every one they sold in the week ended May 8, slightly down from a pace of 1.8 during the previous week, according to BondDesk Group. The number of bonds bought totaled 58,296, while the number of bonds sold was 34,202.

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