Municipal bond mutual funds saw inflows for a fourth consecutive week, doubling last week’s numbers.
The week ending Sept. 28 saw almost $600 million in inflows from muni bond funds that report their flows weekly, according to Lipper FMI.
Flows were more than twice those of the previous week. In the week ended Sept. 21, there were net inflows of $296 million for muni bond funds that report their flows weekly, Lipper reported.
During the past week, the market experienced dramatic shifts in yields in response to the Federal Open Market Committee’s decision to initiate Operation Twist. Also, the recent relative uptick in primary market volume also brought with it price discovery and gave the muni market a generally stronger tone, traders said. With more volatility and volume, investors might have decided to jump into muni funds again.
The industry well remembers how money hemorrhaged from muni bond funds between mid-November and early June, often by more than $1 billion a week. In the week of Jan. 19, investors in weekly reporting funds pulled more than $4 billion.
Assets for funds that report their flows weekly rose this week to $336.8 billion from $335.7 billion the previous week.
The value of the holdings for weekly reporting funds increased by a whopping $781 million. The week before, they reported an increase of $906 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly saw a $483 million inflow, up considerably from a $262 million inflow the week before.
High-yield muni funds have also seen their fourth consecutive week of inflows after six straight weeks of outflows.
Funds that report weekly saw inflows of $37 million, Lipper said. The previous week, high-yield funds reported inflows of $119 million.
Assets for high-yield funds that report their flows weekly ended at $42.18 billion, up from $41.93 billion the previous week. The value of the holdings for weekly reporting funds rose by $216 million. Last week, they rose by $215 million.
The four-week moving average for all high-yield muni bond funds that report their flows weekly was a $99 million inflow, up from a $63 million inflow the week before.
