Investor confidence in tax exempts continued this past week as municipal bond mutual funds saw a third straight week of inflows, and a seventh week out of eight.
The week ending Oct. 26 saw almost $310 million in inflows from muni bond funds that report their flows weekly, according to Lipper FMI.
In the week ending Oct. 19, there were net inflows of $417 million for muni bond funds that report their flows weekly, Lipper reported.
Since Sept. 22, muni yields on the intermediate and long end have mostly continued to rise in response to the Federal Open Market Committee’s decision to initiate Operation Twist. The past four weeks have seen a surge in large deals deluge the primary market. The market had issues absorbing some of them initially, but the past few of weeks have seen generally more positive responses to the new supply, traders said.
Money emptied from muni bond funds between mid-November 2010 and early June, often by more than $1 billion a week. In the week of Jan. 19, investors in weekly reporting funds withdrew more than $4 billion.
After falling for three straight weeks, assets for funds that report their flows weekly rose to $329.7 billion from $329.1 billion the previous week.
The value of the holdings for weekly reporting funds rose by $893 million. The week before, they increased by almost $1.4 billion.
The four-week moving average for all municipal bond mutual funds that report their flows weekly saw a $174 million inflow, down from $247 million the week before.
High-yield muni funds, following two straight weeks of inflows, as well as six in seven weeks, saw outflows this past week.
Funds that report weekly saw outflows of $66 million, Lipper said. The previous week, high-yield funds reported inflows of just $36 million.
Assets for high-yield funds that report their flows weekly, after falling for three consecutive weeks, rose. They ended at $40.94 billion, up slightly from $$40.88 billion the previous week.
The value of the holdings for weekly reporting funds rose by $140 million. Last week, they increased by $163 million.
The four-week moving average for all high-yield muni bond funds that report their flows weekly was a $19.2 million outflow, down from a relatively tiny $6.5 million inflow the week before.