With taxable bond funds declining in value by 2.51% in July their worst performance in a single month since April 1987 investors pulled $1 billion from the category, Reuters reports, citing data from Lipper and AMG Data Services. The bond category that lost the most assets was U.S. government bond funds that invest in mortgage-backed securities. These bonds lost $3.4 billion in assets. Municipal bonds lost $1.37 billion in the month.
Coming off of a strong second quarter for performance, on the other hand, domestic equity funds took in $17.4 billion in July. It was Wall Streets best quarter in 4-1/2 years.
Some analysts believe investors may finally be ready to move back into stocks from bonds. "I think were looking at a period in the near future of lower bond prices and somewhat better equity prices," Robert Truesdell, vice president and fixed income manager with M&T Asset Management, told Reuters.