UPDATE 1-U.S. muni bond fund outflows rise to $1.2 bln-Lipper

Thu Jul 11, 2013 5:56pm EDT

July 11 (Reuters) - U.S. municipal bond funds reported $1.2 billion of net outflows in the week ended July 10, up from $870.4 million of net outflows during the previous week, according to data released by Lipper on Thursday.

The four-week moving average remained negative at $2.2 billion, said Lipper, a unit of Thomson Reuters.

The funds, which are popular with individual investors, have reported net outflows for seven-straight weeks, including a record-high outflow of $4.53 billion the week of June 26.

High-yield muni funds had outflows of $207 million in the latest week after $140.6 million of net inflows the week ended July 3.

Exchange-traded muni funds were also hit with nearly $115.8 million of outflows, up from $33.6 million of outflows in the prior week.

"Equities continue to bring in money," said Chris Mauro, head of U.S. municipal bond research at RBC Capital Markets. He noted that flows into equity funds have been positive since the beginning of June, with inflows topping $3 billion this week and last.

"This could be some sign of the long-awaited asset rotation that everybody was talking about at the beginning of the year," he said.

Separately, a major trading platform for retail bond buyers, BondDesk Group LLC, reported investors in the week through July 10 bought 2.1 bonds for every one sold, compared with the previous week when they bought 2.4 bonds for every one sold.

Total buys in the week were 61,338 and sells were 29,336, BondDesk said.

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