Investors last week handed municipal bond mutual funds the puniest slug of cash in seven months, cementing the slower trend of new money flowing to the industry.
Municipal bond mutual funds that post their figures weekly reported $581.5 million in new money during the week ended Nov. 18, according to Lipper FMI. That was the lightest weekly inflow since April 15.
The figures describe only funds that report their figures once a week. Some of the fund families report their figures monthly. Among all funds, inflows are averaging $1.28 billion a week based on the four-week average.
After sizzling all year, fund flows have decidedly cooled off. Investors have bestowed new money at a rate of barely more than $1 billion a week for the past six weeks, compared with $1.55 billion on average this year.
Funds have commanded $71.49 billion from investors in 2009, easily a record. The industry’s assets have grown by a third this year, to $454.77 billion.
The newer, slower pace of funds is still high by historical standards. The $1 billion weekly rate over the past six weeks has been matched only a handful of times until this year: the summer of 2008, March 2007, August 2002, and March 1993.
Funds also continued to report market losses on their bonds. Municipal funds lost $59.4 million last week, the sixth straight week they’ve lost money. They have lost $10.75 billion during that span. For 2009, they have reported market gains of $39.5 billion.
Other big news in the municipal fund industry was Eaton Vance’s launch of the Build America Bond Fund (ticker symbol: EBABX) on Tuesday.
The fund aims to invest in BABs, the taxable municipal securities created under the American Recovery and Reinvestment Act.
The fund has yet to report its holdings or how much cash it has raised.
It is managed by Cynthia J. Clemson and Craig R. Brandon. Clemson, who oversees $2.81 billion in other funds, joined Eaton Vance in 1985 and became a portfolio manager in 1991. Brandon joined in 1998 as a research analyst and was previously a budget and capital finance analyst for the New York State Assembly. He manages $2.68 billion in other funds.
“We’ve had significant interest in the fund and the portfolio managers are actively investing the assets that are coming in,” said a spokeswoman for Eaton Vance.