Inflows for all municipal bond funds declined the week ending June 4.
Municipal bond funds reported inflows slowed to $192.27 million for the week ending June 5 from $634.48 million the week before, according to Lipper FMI
"I can't imagine we'd see sustained inflows for the rest of the calendar year because I don't know if the market can really support it," Peter Hayes, managing director and head of BlackRock's municipal bonds group, said in a press meeting on Thursday.
Assets of all weekly reporting municipal funds increased to $292.6 billion down $292.5 billion the week before, Lipper FMI reported. The four-week moving average inflow fell to $526.7 million from $714.4 million.
"It's likely over the course of the year rates do move a bit higher and that will change the dynamic of the flows, and while it might not create big outflows I think it has the inflows subside and we get back more to a net zero flow," Hayes said.
Sean Carney, municipal strategist at BlackRock, said that fund flow reports were only part of the picture and demand for municipal bonds is high.
"I think we limit ourselves by just looking at mutual fund flows to determine demand patterns, and while these flows have been robust at 8.4 billion year-to-date, sourcing ICI data," he said in the same press meeting on Thursday. "The truth is they underestimate the massive demand we have seen from direct retail via [separately managed accounts], crossovers, institutional accounts. During strong periods of relative value opportunities, [also]banks and insurance companies as well as foreign investments at times."
Long-term municipal mutual funds that report their flows weekly had an inflow of $34.59 million following an inflow of $225 million the previous week, Lipper said.
Those assets inched up to $158.6 billion after ending at $158.5 billion the week before. The four-week moving average of the long-term fund was declined to an inflow of $294 million from $447.2 million the week before.
High yield fund inflows decreased to $145.89 million from $227.33 million, the second week in a row they have declined.
Assets increased to $439.8 billion, up from $437.4 billion. The four-week moving average inflow slipped to $282.4 million from $365.1 million.
