March 19, 2014 / 3:46 PM / in 4 years

U.S.-based bond funds get biggest inflows in 10 months in latest week -ICI

NEW YORK, March 19 (Reuters) - Investors in U.S.-based
mutual funds poured $5.3 billion into bond funds in the week
ended March 12, marking their biggest inflows since early May
2013 on concerns over Ukraine and China, data from the
Investment Company Institute showed on Wednesday. 
    The inflows in the week ended last Wednesday also marked the
fifth straight week of new cash into the funds, the data from
ICI, a U.S. mutual fund trade organization, showed. 
    The inflows into bond funds exceeded inflows of $3.1 billion
into stock funds over the weekly period, marking the first week
in which demand for bond funds has overtaken demand for stock
funds in nine weeks. The inflows into stock funds were the
lowest in five weeks. 
    The latest five-week run of net inflows into bond funds also
extended the funds' inflow streak, maintaining its status as the
longest such streak since last May, or the period just before
fears of rising interest rates spurred a bond market sell-off
and record outflows of $83.4 billion for the year, according to
ICI data. 
    The inflows into bond funds marked an increase from the
prior week, when the funds attracted $3.7 billion in new cash.
The inflows came despite a slight drop in benchmark Treasuries
prices over the week after a stronger-than-expected U.S. jobs
    Inflows into tax-free municipal bond funds fell modestly to
$551 million in the latest week, but still marked their ninth
straight week of inflows after investors pulled cash out of the
funds for 33 straight weeks between May of last year and the
first week in January. 
    Funds that mainly hold U.S. stocks attracted $1.9 billion in
new cash, down slightly from the prior week's inflows. Funds
that specialize in non-U.S. stocks, meanwhile, attracted $1.2
billion, marking their lowest inflows since the week ended Oct.
    The Standard & Poor's 500 stock index hit record
highs over the weekly period but ended the period down 0.3
percent on geopolitical tensions surrounding Ukraine and
concerns of weak economic growth in China. 
    The yield on the benchmark 10-year U.S. Treasury note,
meanwhile, rose 3 basis points to 2.73 percent over the weekly
period. Bond yields move inversely to their prices. The yield on
the bond rose as high as 2.82 percent on March 7, its highest
level since Jan. 23, after the strong U.S. jobs
    Hybrid funds, which can invest in stocks and fixed income
securities, attracted $1.4 billion in new cash, up modestly from
the prior week's inflows. 
    The following table shows estimated ICI flows for the past
five weeks (all figures in millions of dollars):
                 2/12/2014     2/19     2/26      3/5     3/12
 Total Equity        6,909    5,828    5,025    5,384    3,134
    Domestic         3,812    4,093    3,172    1,945    1,902
    World            3,097    1,736    1,853    3,440    1,233
 Hybrid*             1,874    1,739    1,705    1,197    1,429
 Total Bond          1,127    2,909    2,282    3,698    5,272
    Taxable            965    2,487    1,623    2,942    4,721
    Municipal          162      422      659      756      551
 Total               9,911   10,476    9,012   10,279    9,835
 *Hybrid funds can invest in stocks and/or fixed income

 (Reporting by Sam Forgione; editing by Andrew Hay)
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