Outflows from U.S. bond funds accelerate in latest week - ICI

Wed Aug 21, 2013 11:51am EDT

By Sam Forgione
    NEW YORK, Aug 21 (Reuters) - Investors in mutual funds based
in the United States pulled $3.9 billion out of bond funds in
the latest week, the third straight week of outflows from such
funds, data from the Investment Company Institute showed on
Wednesday. 
    The outflows in the week ended Aug. 14 accelerated from the
prior week, when investors withdrew $2.09 billion from the
funds. Investors have withdrawn nearly $13 billion from bond
funds over the last three weeks, according to ICI, a U.S. mutual
fund trade organization. 
    Interest rates rose during the latest week on worries that
the U.S. Federal Reserve will begin winding down its economic
stimulus program, which would send bond yields higher. 
    The Fed is buying $85 billion in bonds monthly in an effort
to spur hiring and keep interest rates low. The stimulus has
been a major source of support for both bond and stock markets. 
    The yield on the benchmark 10-year U.S. Treasury note rose
11 basis points to 2.71 percent in the week to Aug. 14. As
yields rise, prices fall.
    Stock funds had inflows totaling $1.49 billion in the latest
week, down from inflows of $3.41 billion in the prior week. 
    Funds that hold only U.S. stocks had outflows of $764
million, reversing modest inflows of $357 million in the
previous week. Funds that hold stocks of companies outside the
United States had inflows of $2.26 billion, their 15th straight
week of inflows.
    The benchmark S&P 500 stock index fell 0.33 percent
in the latest week on concerns surrounding the Fed's stimulus
plans. 
    Hybrid funds, which can invest in stocks and fixed income
securities, attracted $1.55 billion in new cash from investors
in the latest week, up modestly from inflows of $1.33 billion in
the previous week and extending the funds' inflow streak to
seven sraight weeks.
    The following table shows estimated ICI flows for the past
five weeks (all figures in millions of dollars):
               7/17/13  7/24/13  7/31/2013   8/7/2013  8/14/2013
 Total Equity    3,653    4,209        711      3,409      1,494
    Domestic     2,270    2,729       -930        357       -764
    World        1,382    1,481      1,641      3,053      2,259
 Hybrid*         3,191    2,056      1,739      1,329      1,549
 Total Bond     -3,251    2,159     -6,971     -2,090     -3,922
    Taxable       -797    4,170     -4,097         35     -1,836
    Municipal   -2,455   -2,011     -2,873     -2,126     -2,086
 Total           3,592    8,425     -4,521      2,648       -879
 *Hybrid funds can invest in stocks and/or fixed income
securities.