U.S.-based bond funds have smallest outflows in six weeks -ICI
NEW YORK, Sept 25 (Reuters) - Investors in mutual funds based in the United States pulled just $2.64 billion out of bond funds in the latest week amid expectations that the Federal Reserve will keep its bond-buying program largely intact, data from the Investment Company Institute showed on Wednesday. The outflows from bond funds in the week ended Sept. 18 were the smallest in six weeks, though they marked the eighth straight week of outflows, data from ICI, a U.S. mutual fund trade organization, showed. The Fed on Sept. 18 announced that it would maintain its monthly pace of buying $85 billion in bonds. Going into the Fed's policy meeting, investors were already increasingly betting that the central bank would maintain the pace of bond purchases, due to weak U.S. economic data and the withdrawal of former U.S. Treasury Secretary Lawrence Summers from consideration to be the next Fed chairman. Summers was considered more of a hawk on monetary policy and his nomination was viewed as less favorable for the continuation of the Fed's easy-money policies. Funds that hold municipal bonds had outflows of just $1.75 billion in the latest week, the lowest level of outflows from the funds in 11 weeks, the ICI data showed. Selling pressure on bonds tempered over the weekly period. The yield on the benchmark 10-year U.S. Treasury note fell during the week and plunged 17 basis points to 2.69 percent following the Fed's decision. Bond yields move inversely to their prices. Stock funds attracted $3.4 billion in new cash over the week, down from inflows of $5.2 billion the previous week. It was the third straight week of net inflows into the funds. Funds that hold non-U.S. stocks attracted $3.35 billion of that overall sum, marking the largest inflows into the funds since the week ended March 20. The MSCI world equity index rose 1.6 percent over the reporting period. Funds that hold U.S. stocks attracted a meager $44 million in inflows over the week, despite the Standard & Poor's 500 stock index's rise of 2.2 percent over the reporting period. Hybrid funds, which can invest in stock and fixed-income securities, raked in $1.53 billion in new cash, marking the biggest inflows into the funds in five weeks. The following table is a breakdown of estimated ICI flows for the past five weeks (all figures in millions of dollars): 8/21/13 8/28/13 9/4/2013 9/11/2013 9/18/2013 Total Equity 1,345 -274 902 5,233 3,395 Domestic -376 -1,411 -700 2,466 44 World 1,721 1,137 1,602 2,766 3,351 Hybrid* 1,082 1,135 349 1,282 1,530 Total Bond -11,122 -9,302 -6,758 -5,513 -2,639 Taxable -7,353 -6,388 -4,710 -2,807 -891 Municipal -3,769 -2,913 -2,048 -2,706 -1,748 Total -8,694 -8,440 -5,507 1,001 2,286 *Hybrid funds can invest in stocks and/or fixed income securities.
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