By Michael Connor
March 7 U.S. municipal bond funds ended two
months of uninterrupted weekly gains as investors turned their
attention and assets to America's stock market rally.
Lipper said on Thursday that municipal funds posted $96.9
million of net outflows in the week ended March 6, compared with
$323.8 million of inflows in the previous week.
The four-week moving average for mutual funds specializing
in tax-free debt sold by states and local governments remained
positive at $252.3 million of net inflows, according to data
from Lipper, a unit of Thomson Reuters.
The last time muni funds had posted net outflows was the
week ended Jan. 2, when net outflows were $6.8 million. In 2012,
the funds posted long stretches of net inflows, with just a
handful of weekly net outflows, according to Lipper.
"Of course stocks have something to do with the outflows, but
with flows being positive for so long, you're going to have some
weeks of outflows," said John Mousseau, portfolio manager at
"I'm not worried. We know the Federal Reserve will keep
rates low, we know inflation is low. And you've got all those
Baby Boomers who'll be buying when yields are high."
As the Dow Jones industrial average hit record highs
this week, investors also stepped back from high-yield muni
funds, with Lipper reporting net outflows of $1.3 million,
compared with $69.9 million of inflows the week before.
Flows into exchange-traded funds bucked the trend. Net
inflows rose to $14.6 million from $11.9 million of net inflows
the previous week.
Retail investors bought 1.7 bonds for every one they sold in
the week ended March 6, the same pace as during the previous
week, according to BondDesk Group.
The number of bonds bought totaled 62,199, while the number
of bonds sold was 36,831.
On Thursday U.S. stocks closed higher, with the Dow setting
a record high a third straight day.
Lipper also reported that investors poured $5.67 billion in
new cash into U.S.-based stock funds in the latest week, the
largest in four weeks.