Muni Bond Funds Rebound Sharply With Strong Inflows

Municipal bond mutual funds saw heavy inflows, rebounding with authority from their first week of outflows in more than six months.
Those funds that report their flows weekly recorded inflows of $866 million for the week ended Nov. 7. That compares to outflows of $123 million from weekly reporting funds for the week ended Oct. 31.
Muni bond funds had seen 28 straight weeks of inflows before last week, when Hurricane Sandy touched down and ravaged large swaths of the Northeast. The storm knocked offline much of the underwriting operations of the industry’s metropolitan New York-based banks and affected the number of new deals that had been expected to reach the market that week. It also filled investors with more uncertainty leading up to the U.S. elections.
For perspective, muni bond funds have seen inflows for 58 of the past 62 weeks. And demand for munis remains strong among investors.
This week, investors and the calendar recovered sufficiently to see record low triple-A yields at the 10-year and 30-year sections of the curve.
Assets for all muni funds that report their flows weekly increased for a seventh straight week to $318.6 billion from $316.8 billion the week before.
The value of the holdings for weekly reporting funds rose for a third straight week, by $968 million. The week before, they increased by $619 million.
The four-week moving average for all municipal bond mutual funds that report their flows weekly saw $507 million of inflows, down some from a $520 million gain the week before.
Long-term bond funds that report their flows weekly recovered as well. They saw strong inflows to the tune of $544 million. This represented a sharp rise from the $231 million of outflows they reported the week before.
As with other categories, high-yield muni funds reported outflows for the week. Flows have been positive for 46 of the previous 50 weeks.
High-yield funds that report weekly saw $180 million in inflows, Lipper said. The previous week, they reported $86 million in outflows.
Assets for high-yield funds that report their flows weekly increased to $43.63 billion, up from $43.29 billion the week before.
The value of the holdings for weekly reporting high-yield funds increased by $165 million. Last week, they increased by $177 million.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly was $90.5 million of inflows, climbing slightly from $84.1 million the week before.