October 8, 2015 / 10:54 PM / 4 years ago

UPDATE 1-U.S.-based taxable bond funds bleed $36.2 bln in Q3 - Lipper

(Adds flows data, analyst comment, table)
    By Sam Forgione
    NEW YORK, Oct 8 (Reuters) - Investors in U.S.-based funds
pulled $36.2 billion out of taxable bond funds in the third
quarter, marking the biggest outflows from the funds since the
fourth quarter of 2008, preliminary Lipper data showed on
    Funds that hold investment-grade corporate bonds posted
$30.6 billion in outflows over the quarter to mark their biggest
quarterly outflows since Lipper records began in 1992, the
preliminary data showed. 
    "It points to concerns about higher interest rates ahead,"
said Jeff Tjornehoj, head of Americas research at Lipper. The
outflows came even as the benchmark Barclays U.S. Aggregate Bond
Index rose 1.2 percent over the quarter.
    Investors are closely eyeing the Federal Reserve for signals
on when the central bank will hike interest rates for the first
time since 2006.
    Taxable bond funds started the fourth quarter on a brighter
note with investors committing $2.3 billion to the funds in the
week ended Oct. 7, according to Lipper's final weekly data.
Funds that specialize in U.S. Treasuries attracted $1.9 billion,
marking their biggest inflows in four weeks. 
    Taxable bond exchange-traded funds attracted all of the
inflows, at $4.6 billion, while taxable bond mutual funds posted
$2.3 billion in outflows to mark their 11th straight week of
    Investors committed $735 million to riskier high-yield bond
funds after pulling $2.2 billion from the funds the prior week,
which were the biggest outflows in 13 weeks. 
    Investors pulled $8 billion out of stock funds over the
weekly period, marking the biggest withdrawals from the funds in
four weeks. All of the outflows, at $8.1 billion, were from
funds that hold U.S. shares, while funds that specialize in
foreign shares attracted a meager $58 million in inflows. 
    Tjornehoj attributed the outflows from stock funds to
uncertainty over the timing of the Fed's first rate hike and
worries over global growth. He noted concerns over China, the
world's second-biggest economy.
    "Until we get better economic news out of China, I think the
negative sentiment will weigh on investor behavior," he said.
    For the quarter, stock funds posted $10.8 billion in
outflows to mark their first quarterly withdrawals since the
fourth quarter of 2012, the preliminary Lipper data showed. 
    The weekly Lipper fund flow data is compiled from reports
issued by U.S.-domiciled mutual funds and exchange-traded funds.
    The following is a broad breakdown of the flows for the
week, including exchange-traded funds (in $ billions): 
      Sector           Flow Chg      Pct of    Assets    Count
                       ($ blns)      Assets   ($ blns)   
 All Equity Funds   -8.037           -0.17   5,038.157   11,935
 Domestic Equities  -8.094           -0.23   3,610.040    8,547
 Non-Domestic        0.058            0.00   1,428.116    3,388
 All Taxable Bond    2.329            0.10   2,290.396    6,114
 All Money Market   16.761            0.71   2,375.757    1,200
 All Municipal       0.714            0.21     349.062    1,508
 Bond Funds                                              
 (Reporting by Sam Forgione; Editing by Bernard Orr and Diane
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