June 18, 2015 / 10:36 PM / 4 years ago

U.S.-based taxable bond funds post biggest outflows of year: Lipper

NEW YORK (Reuters) - Investors in U.S.-based funds pulled $5.2 billion out of taxable bond funds in the week ended June 17, with riskier high-yield bond funds accounting for most of the outflows on concerns over Greece, data from Thomson Reuters’ Lipper service showed on Thursday.

The total outflows from taxable bond funds were the biggest since the last week of 2014 and marked their second straight week of withdrawals, while withdrawals of $2.9 billion from high-yield funds were the biggest since mid-December. Funds that specialize in safe-haven U.S. Treasuries posted $330 million in outflows.

Stock funds attracted $6.9 billion to mark their biggest inflows since mid-March and their fourth straight week of new demand. Funds that specialize in U.S. shares captured most of the demand with inflows of $4.5 billion, while funds that invest in international shares attracted $2.4 billion.

All of the inflows into stock funds went into exchange-traded funds, which attracted $7.8 billion, while mutual funds posted $920 million in outflows. ETFs are generally believed to represent the behavior of institutional investors, while mutual funds are thought to represent the retail investor.

The outflows from high-yield bond funds and preference for U.S. shares came on renewed worries that Greece could default and leave the euro zone after 11th-hour talks between the near-bankrupt nation and its creditors collapsed.

The outflows from taxable bond funds came despite the Barclays U.S. Treasury Index’s gain of 0.8 percent over the reporting period.

“It was really driven by selling in the high-yield space, where investors return to old habits when issues about Greece weigh heavily on their minds,” said Jeff Tjornehoj, head of Americas research at Lipper, on the outflows from taxable bond funds.

While Tjornehoj said investors likely favored U.S. shares on the view that they may be more insulated from Greece’s debt situation than European shares, he said inflows into European stock funds may show some investors’ confidence that Greece will find a resolution.

Funds that specialize in European shares attracted $962 million to mark their biggest inflows since mid-April.

Low-risk money market funds posted $11 billion in outflows, their biggest since mid-April.

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 % Assets Assets Count

($Bil) ($Bil)

All Equity Funds 6.920 0.13 5,410.046 11,738

Domestic Equities 4.534 0.12 3,874.609 8,427

Non-Domestic 2.386 0.15 1,535.438 3,311


All Taxable Bond -5.208 -0.22 2,341.941 6,080


All Money Market -10.770 -0.47 2,274.567 1,278


All Municipal Bond -0.421 -0.12 345.459 1,495


Reporting by Sam Forgione; Editing by Andre Grenon and Chris Reese

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