For the first time in 12 weeks, municipal bond funds reported cash inflows.
The weekly reporting funds saw $125.410 million of inflows in the week ended July 22, after outflows of $29.255 million in the previous week, according to the latest Lipper FMI data. This brings to 16 out of 30 weeks this year that the funds have taken in cash.
The four-week moving average remained negative at $352.090 million after being in the red at $409.882 million in the previous week. The moving average has now been negative for nine weeks in a row. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced inflows, gaining $39.114 million in the latest week, after seeing inflows of $34.223 million in the previous week. Intermediate-term funds again recorded inflows, of $152.569 million after seeing inflows of $20.109 million in the prior week. And exchange traded funds saw inflows of $108.499 million, after experiencing inflows of $45.314 million in the previous week.
High-yield muni funds, however, reported outflows of $3.550 million in the latest reporting week, after an inflow of $14.513 million the previous week. In the past 12 weeks, high-yield funds have seen outflows nine times totaling $1.707 billion and inflows three times totaling $78.785 million.
Financial concern about the financial situation in Puerto Rico has been cited as one reason for the previous streak of outflows, which especially impacted the high-yield sector.
"Negative returns and the flight from Puerto Rico have driven high-yield muni mutual fund outflows," Bank of America Merrill Lynch said in a recent report. "The correlation between the total return of high-yield index and fund flows is high."
Barlays Municipal Research also said in a new report that it was concerned about high-yield muni fund flows, which it said may continue to be affected by Puerto Rico woes.
