U.S. bond funds hit with more than $10 billion in outflows - ICI

NEW YORK, June 12 Wed Jun 12, 2013 5:31pm EDT

NEW YORK, June 12 (Reuters) - Investors in mutual funds based in the United States pulled more than $10 billion out of bonds funds in the week ending June 5, on fears the U.S. Federal Reserve would begin winding down its bond-buying program, data from the Investment Company Institute showed on Wednesday.

Total estimated outflows from long-term mutual funds were $11.53 billion for the week. The last time fund outflows reached a similar figure was in early October 2012.

Bond funds saw outflows of $10.93 billion, compared to inflows of $1.36 billion during the previous week. Taxable bond funds saw a withdrawal of $8.68 billion, while municipal bond funds had outflows of $2.26 billion.

Equity funds also saw redemptions of $942 million for the week, compared to outflows of $1.00 billion in the previous week.

The benchmark S&P 500 stock index fell 2.4 percent over the reporting period on investors' fears related to the U.S. Federal Reserve's next move. The Fed, which is buying $85 billion in Treasuries and agency mortgage debt per month, signaled on May 22 that it could reduce its bond-buying this year depending on upcoming economic data.

Domestic equity funds had also investors pulling out $2.52 billion, while world equity funds saw $1.58 billion of inflows.

Hybrid funds, which can invest in stocks and fixed income securities, reaped modest inflows of $347 million for the week, compared to inflows of $1.13 billion in the previous week. The following is a breakdown of estimated ICI flows for the past five weeks (all figures in the millions of dollars):

5/8/13 5/15/2013 5/22/2013 5/29/2013 6/5/2013 Total Equity 3,445 2,603 2,631 -1,004 -942

Domestic 362 319 -313 -1,711 -2,521

World 3,082 2,284 2,943 707 1,578 Hybrid* 1,546 1,604 1,389 1,127 347 Total Bond 7,392 4,524 4,125 1,360 -10,933

Taxable 7,655 3,922 3,970 1,576 -8,677

Municipal -263 602 156 -216 -2,256 Total 12,382 8,731 8,144 1,483 -11,528

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