By Sam Forgione
NEW YORK, Dec 26 Investors in U.S.-based mutual
funds committed the least amount of new cash to bond funds in
six months and shunned municipal bonds in the latest week as
U.S. lawmakers hit a standstill in talks over the looming
"fiscal cliff," data from the Investment Company Institute
showed on Wednesday.
Investors gave just $431 million to bond funds in the week
ended Dec. 19, said ICI, a U.S. mutual fund trade organization.
The modest inflows mark the weakest turnout for the funds since
suffering outflows at the end of May.
Funds that hold municipal bonds, meanwhile, had outflows of
$3.26 billion, which is the most withdrawn from the funds this
year. In the prior week, the funds attracted inflows of $211
Investors have become wary of municipal bonds in recent
weeks in light of potential federal tax reforms being discussed
in Washington that could alter the tax-exempt status of the
The benchmark S&P 500 stock index rose 0.51 percent
over the reporting period despite gridlock between U.S.
President Barack Obama and U.S. Republican House Speaker John
Boehner in talks to avert the "fiscal cliff" of tax hikes and
spending cuts set to occur early next year.
Investors withdrew a net $4.93 billion from stock funds over
the period, showing less aversion to the funds after redeeming
$8.48 billion the previous week.
Hybrid funds, which can invest in stocks and fixed income
securities, attracted just $11 million in new cash over the
period after pulling in $119 million the prior week.
The following table is a breakdown of ICI flows for the past
five weeks (all figures in the millions of dollars):
11/20/12 11/28/12 12/5/12 12/12/12 12/19/2012
Total Equity -8,818 -626 -7,180 -8,478 -4,932
Domestic -7,504 -613 -5,858 -7,232 -5,224
World -1,314 -13 -1,321 -1,246 292
Hybrid* -1,197 144 -71 119 11
Total Bond 4,397 4,255 5,165 1,787 431
Taxable 3,031 2,956 4,092 1,576 3,694
Municipal 1366 1,299 1,074 211 -3,263
Total -5,618 3,772 -2,085 -6,572 -4,490
*Hybrid funds can invest in stocks and/or fixed income