Mutual Funds’ Streak at 34

By John Kell (WSJ)

Long-term mutual funds saw net inflows for the 34th straight week as more money going to hybrid and bond funds again offset stock-fund outflows, according to figures released Wednesday by the Investment Company Institute.

Total estimated inflows were $3.14 billion in the week ended Nov. 4, putting the total during the streak at about $349 billion.

Stock funds had outflows of $4.7 billion, compared with outflows of $840 million last week. U.S. stock funds took out $5.25 billion, while foreign funds had $546 million added to them. The U.S. decline comes as the stock market continues to rally.

At the same time, bond funds had estimated inflows of $7.49 billion, down from $10.19 billion the previous week, according to the ICI. Taxable funds added $6.59 billion, while municipal ones put in $899 million.

Investors put $358 million into hybrid funds, compared with $239 million the previous week, the institute said. Such funds can invest in both stocks and fixed-income assets.

Meanwhile, assets in money-market funds declined $13.13 billion in the latest week, continuing a recent trend of outflows, this time due to steep government fund withdrawals, according to iMoneyNet.

Cash has been leaving money-market funds as investors have been seeking higher returns—yields for the funds have been close to zero for months. But some economists are predicting a Federal Reserve Board rate increase next year, which would be a welcome break for fund companies that have been waiving fees on their funds in order to maintain investors.

The seven-day yield on taxable money-market funds held steady for a third week at a record low of 0.04%. The yield has been steadily declining in the wake of a decision by the Federal Reserve to keep the target federal-fund rate under 0.25%, which it affirmed last week.

For the week ended Tuesday, total assets in money-market funds dropped to $3.3 trillion.

Overall, taxable funds fell $12.48 billion to $2.888 trillion as institutional investors took out $11.62 billion and individual investors withdrew $861.3 million. Prime funds, which invest in securities such as commercial paper, saw assets dropped $1.27 billion. Government funds had $11.21 billion in outflows, according to iMoneyNet.

Tax-free funds posted outflows of $649.8 million, as yields at seven-day funds dropped to 0.04% from 0.05% but held steady at 0.05% for 30-day funds.

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