Municipal mutual funds reported $227.3 million of net outflows, ending a three-week run of inflows, Lipper FMI data showed Thursday.
The outflows compared to $333.59 million of inflows reported by the funds in the week ended Jan. 29. Those funds gained in the two prior weeks, reporting inflows of $86 million for the week ended Jan. 22, and $103 million in the week ended Jan. 15 - their first inflows since May 2013.
Morningstar Inc. analyst Jeff Tjornehoj said Standard & Poor's downgrade of Puerto Rico general obligation bonds to junk status late Tuesday spooked investors and contributed to the outflows.
"I suspect enough advisors had misgivings about Puerto Rico that they shifted money around," he said in a report Thursday.
Assets for all municipal funds that report flows weekly edged higher to $276.78 billion for the week ended Feb. 6, from $276.66 billion the week before.
The four-week moving average for all municipal bond funds that report their flows weekly decreased to $73.86 million, compared with $125.94 million the previous week.
Long-term municipal bond funds that report flows weekly posted a loss of $277.57 million for the week ended Feb. 6, on the heels of outflows of $53.92 million in the prior week.
High-yield municipal bond funds reported inflows of $96.06 million, compared to gains of $301.08 million the week before.
Assets for these high-yield funds rose to $371.75 billion from $369.29 billion.
The four-week moving average for all high-yield municipal bond funds that report their flows weekly showed $208.43 million of inflows, up from $196.91 million of inflows the previous week.