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Money Flees Muni Bond Funds Again

JUL 7, 2011 6:58pm ET
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Revisiting an old trend, municipal bond mutual fund flows saw outflows once again. They had seen net inflows for three out of the four previous weeks.

In the week ended July 6, there were net outflows of $272 million for muni bond funds that report their flows weekly, according to Lipper FMI. The previous week investors deposited $163 million into muni funds.

The outflows are familiar territory for the industry. For 29 weeks between mid-November and early June, money had been pouring out of municipal bond funds, often at rates of more than $1 billion a week. Investors in weekly reporting funds yanked more than $4 billion in the week of Jan. 19, Lipper reported.

Assets for funds that report their flows weekly dipped slightly this week to $318.3 billion from $318.5 billion the previous week. But the value of the holdings for weekly reporting funds rose $126 million. The previous week, they reported a drop of $470 million.

The four-week moving average for all municipal bond mutual funds that report their flows weekly saw a $36 million outflow compared to a $101 million inflow the week before.

High-yield muni funds saw outflows for only the second time in nine weeks. Funds that report weekly saw a slightly slower outflow of $27 million, Lipper reported. The previous week, high-yield funds reported inflows of $92 million.

In addition, assets for high-yield funds that report their flows weekly ticked up to $39.72 billion from $39.68 billion the previous week. The value of the holdings for weekly reporting funds increased by almost $70 million. Last week, they dropped the first time in 12 weeks by $4 million.

The four-week moving average for all high-yield muni bond funds that report their flows weekly rose to a $51.2 million inflow from a $78 million inflow the week before.

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