UPDATE 2-U.S.-based bond mutual funds post outflows of $7.97 bln -ICI

Wed Jun 26, 2013 4:03pm EDT

By Sam Forgione
    NEW YORK, June 26 (Reuters) - Investors in mutual funds
based in the United States pulled $7.97 billion out of bond
funds in the latest week, marking the first three-week streak of
outflows from the funds since August 2011, data from the
Investment Company Institute showed on Wednesday.
    The outflow from bond funds in the week ended June 19 marked
an improvement, however, from the prior week's outflows of
$13.47 billion, said ICI, a U.S. mutual fund trade organization.
    Municipal bond funds had outflows of $3.37 billion over the
weekly reporting period, the most since January 2011. Taxable
bond funds had outflows of $4.6 billion over the period, down
from outflows of $10.23 billion the prior week. 
    Stock mutual funds, meanwhile, posted inflows of $1.87
billion over the period. Those inflows marked the first cash
gains for the funds after three straight weeks of outflows.
Inflows of $2.33 billion into funds that hold non-U.S. stocks
accounted for the gains, while funds that hold U.S. stocks
suffered outflows of $463 million. 
    The outflows from bond funds and inflows into stock funds
came largely ahead of Federal Reserve Chairman Ben Bernanke's
comments last Wednesday that the central bank may reduce its $85
billion in monthly bond purchases later this year if the economy
is strong enough. Bernanke also said the Fed may end the program
in mid-2014. 
    Bernanke's comments triggered a selloff in bond and stock
markets. U.S. stocks fell more than 1 percent after the
comments, while the yield on the benchmark 10-year U.S. Treasury
note rose to a 15-month high of 2.33 percent. 
    Hybrid funds, which can invest in stocks and fixed income
securities, attracted $678 million in new cash, down from $1.15
billion in inflows the previous week. 
    The following table is a breakdown of estimated ICI flows
for the past five weeks (all figures in millions of dollars):
               5/22/13  5/29/13  6/5/2013  6/12/2013  6/19/2013
 Total Equity    2,632     -999      -930     -1,032      1,866
    Domestic      -313   -1,712    -2,520     -2,285       -463
    World        2,945      713     1,590      1,253      2,330
 Hybrid*         1,299    1,127       347      1,147        678
 Total Bond      4,106    1,360   -10,910    -13,468     -7,972
    Taxable      3,960    1,576    -8,655    -10,232     -4,604
    Municipal      146     -216    -2,256     -3,236     -3,368
 Total           8,037    1,488   -11,493    -13,353     -5,428
 *Hybrid funds can invest in stocks and/or fixed income
securities.