Muni Mutual Funds See $568.71 Million Outflow

Cash withdrawals from municipal bond mutual funds that report their figures weekly rose by $40.38 million to $568.71 million in the week ended March 16, according to Lipper FMI.

Overall, net outflows from weekly reporters mostly continue to taper off following January’s $4 billion exodus.

The funds lost $1.16 billion in the week ended Feb. 9, $973.86 million in the week ended Feb. 16, and $610.42 million in the week ended Feb. 23. Outflows increased temporarily to $1.03 billion on March 2 before dropping back to $528.33 million the following week.

“Despite the persistent — albeit tapering — net outflows, assets have stabilized for now and have been supported by positive market gains,” said Chris Holmes, vice president of public finance research at JPMorgan.

Early last week, both municipals and Treasuries had benefited from a flight to quality, as fears about radiation in the aftermath of the earthquake and tsunami in Japan led to widespread dumping of risky assets and a flight to safety.

Municipals strengthened by 10 basis points between Tuesday and Wednesday, but held flat following Thursday’s Treasury sell-off that caused the 10-year note to rise eight basis points.

Meanwhile, the four-week moving average for all muni bond mutual funds in the $467.14 billion industry as of March 16 was $966.65 million after setting a yearly low of $1.07 billion the week before.

All funds continued to see their market value see-saw last week: jumping $1.58 billion to $467.14 billion in the week ended March 16, after falling $446.75 million to $466.14 billion the previous week.

The market value of all funds rose by $2.81 billion as of March 2 after raking in $3.05 billion in the week ended Jan. 26,  the most so far this year.

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