U.S.-based bond funds attract 25th straight week of inflows -ICI

Wed Aug 6, 2014 11:03am EDT

By Sam Forgione
    NEW YORK, Aug 6 (Reuters) - Investors in U.S.-based mutual
funds committed $1.8 billion to bond funds in the week ended
July 30, marking their 25th straight week of net inflows partly
on unexpected gains in bonds this year, data from the Investment
Company Institute showed on Wednesday. 
    The inflows into bond funds were up modestly from inflows of
$1.5 billion in the prior week, according to the data from ICI,
a U.S. mutual fund trade organization. Stock funds attracted
$205 million in new cash, marking their first net inflows in
three weeks.
    Bond funds have regained investors' faith after posting
record annual outflows of $83.4 billion in 2013, according to
ICI data. Analysts have cited persistent demand for safer income
on fears of market volatility and unexpectedly solid returns
from bonds this year. 
    The benchmark Barclays U.S. Aggregate bond index has risen 4
percent this year through Tuesday. Bond prices plunged last year
and bond funds posted hefty withdrawals on fears that a pullback
in the Federal Reserve's massive bond-buying program would
trigger a spike in interest rates. 
    The small inflows into stock funds came after outflows of
$1.1 billion the prior week. 
    All of the inflows went toward funds that specialize in
non-U.S. stocks, which attracted $1.5 billion, while funds that
mainly hold U.S. stocks posted about $1.3 billion in outflows,
marking the 14th straight week of withdrawals. 
    Investors and analysts have noted cheaper valuations in
international stocks compared to U.S. stocks following the
benchmark S&P 500's nearly 30 percent advance last year.
In addition to that gain, the index had risen 6.6 percent this
year through July 30. 
    Hybrid funds, which can invest in stocks and fixed income
securities, attracted $1 billion in new cash, marking their 12th
straight week of new cash. 
    The following data shows estimated ICI flows for the past
five weeks (all figures in millions of dollars):
                        7/30/14    7/23    7/16     7/9      7/2
 Total equity               205  -1,144  -2,243     666   -7,835
    Domestic             -1,257  -3,260  -3,951  -1,070   -8,887
    World                 1,462   2,116   1,708   1,736    1,052
 Hybrid*                  1,024   1,124     917   1,007      636
 Total bond               1,823   1,458   2,469   2,721    2,979
    Taxable               1,137     574   1,972   3,203    2,704
    Municipal               687     884     497    -482      276
 Total                    3,052   1,438   1,143   4,394   -4,220
 *Hybrid funds can invest in stocks and/or fixed income
securities.

 (Editing by Grant McCool)
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