Investors this past week returned to their acquired habit of pulling money out of municipal bond mutual funds.

The withdrawals resumed after the previous week’s positive flows ended a 29-week streak of outflows.

There were net outflows in the week ended June 15 of $172 million for muni bond funds that report their flows weekly, according to Lipper FMI. Investors the previous week deposited $274 million into muni funds.

The pressure on funds will be with the market for a while, according to Matt Fabian, managing director at Municipal Market Advisors. He said that’s because there is a broader realization that munis are no longer the triple-A, plain vanilla asset class that many investors thought they were.

“The fund families are going to have a long-term leakage of investors, with people pulling out of munis for the long term in favor of asset classes they understand a little better,” Fabian said. “Don’t expect this robust return of inflows anytime soon.”

Investors swarmed to muni bond funds with apparent abandon in 2009 and most of 2010. But that stopped as flows reversed during the week of Nov. 17, Lipper numbers show. On Nov. 11, Standard & Poor’s downgraded roughly $22 billion of junk-rated tobacco bonds, and some muni investors regarded the move as a signal to sell.

Negative headlines associated with the municipal market followed, including predictions of massive numbers of defaults. For the week ended Jan. 19, investors in funds that report their flows weekly yanked more than $4 billion, Lipper reported.

This week, assets for funds that report their flows weekly fell $100 million to $317.4 billion from $317.5 billion the previous week. The value of the holdings for weekly reporting funds climbed by just $64 million. Last week, they reported a jump of $562 million.

For all municipal bond mutual funds that report their flows weekly, the four-week moving average inched up to a $157.3 million outflow from a $141.5 million outflow the week before.

High-yield muni funds were one bright spot for the week, and generally have been for a while. Funds that report weekly saw inflows of $38.6 million, Lipper reported.

Still, that’s down from the previous week, which saw inflows of $80.6 million. High-yield bond funds have reported inflows five out of the past six weeks, Lipper numbers show.

In addition, assets for high-yield funds that report their flows weekly rose to $39.24 billion from $39.15 billion the previous week. The value of the holdings for weekly reporters inched upward by only $39 million. Last week, they jumped by almost $119 million.

For all high-yield muni bond funds that report their flows weekly, the four-week moving average of inflows fell to $22.6 million from $36.4 million the week before.

The Investment Company Institute’s most recent numbers showed positive flows for muni funds: $298 million for the week ended June 8. That compares to the $20 million in deposits in the previous week.

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