UPDATE 1-U.S. muni bond funds post $2.14 bln of weekly outflows-Lipper

Thu Aug 22, 2013 5:41pm EDT

Aug 22 (Reuters) - U.S. municipal bond funds reported $2.14 billion of net outflows in the week ended Aug. 21, nearly double the previous week's $1.2 billion of outflows, according to data released by Lipper on Thursday.

Investors have been pulling money out of the funds for 13 straight weeks, resulting in the longest string of weekly net outflows since June 2011.

Competition from equity markets and Detroit's historic municipal bankruptcy filing last month have helped fuel the exodus out of muni funds.

Investors in the municipal bond market also worry the U.S. Federal Reserve will soon begin to taper its bond-buying monetary stimulus program, which would likely hurt bond prices amid expectations of rising interest rates.

The four-week moving average remained negative at $1.64 billion, said Lipper, a unit of Thomson Reuters.

High-yield muni funds were hit with a seventh consecutive week of outflows, which totaled $460 million, up from $216.5 million in the week ended Aug. 14.

After net inflows of $3.8 million in the prior week, exchange-traded muni funds reported nearly $115 million of net outflows in the latest week.

BondDesk Group LLC reported that retail investors bought 2.5 municipal bonds for every one they sold in the week ended Aug. 21, up from the prior week's ratio of 2.3. The number of bonds bought totaled 96,798, while the number of bonds sold was 38,230.

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