Municipal bond funds' inflows more than doubled for the week ending March 13, as investors shifted money into fixed income securities.
Inflows at weekly reporting funds surged to $223.79 million from $99.48 million the week before, Lipper FMI reported Thursday. The rise came during the largest week of issuance of 2014, as muni bond sales climbed to $11.38 billion from a scheduled $11 billion.
It was the fifth-straight week of inflows for the muni market. Flows have generally remained positive for 2014, as the only outflows came in the first two weeks of January and the week ending in Feb. 5.
"We're seeing the opposite of what had been hanging over the market," one trader on the west coast said in an interview. "We're almost in nine out of ten weeks of inflows, and it's encouraging because the concern used to be outflows".
The municipal market reported steady outflows in the second half of 2013 on concern over rising rates and credit after Ben S. Bernanke, then chairman of the Federal Reserve, said in June the Fed would scale back its bond purchases and Detroit filed in July for protection in the biggest municipal bankruptcy ever.
"Outflows last year were the final domino to fall on the market, after several different variables like Detroit, distress and money managers saying the Dow Jones [industrial average] was going to jump," the trader said. "That's not the case now, that reallocation of assets is being questioned I think money is coming back into fixed income".
Assets of all weekly reporting municipal funds also continued to increase for the week ending March 13. They rose to $282.26 billion, up from $281.69 billion, Lipper reported.
The four-week moving average inflow increased to $222.576 million from $187.16 million.
Long-term municipal mutual funds that report their flows weekly jumped back up to positive $26.88 million from $23.68 million of outflows the previous week.
Those assets dropped to $150.56 billion from $150.7 billion at the end of the previous week. The four-week moving average inflow of the long-term funds declined to $52.6 million from $69.4 million the week before.
Inflows to high-yield mutual funds rose to $199.4 from the previous week's $158.36 million, taking the four-week moving average to $189.31 million from $179.75 million. Assets increased to $38.89 billion, up from $38.7 billion the week before.
