Municipal bond mutual fund outflows continued to subside last week from recent record-setting levels as the cash most prone to panic appears to have left by now.
Muni mutual funds that report their figures weekly posted a net outflow of $1.07 billion during the week that ended Feb. 2, according to Lipper FMI. This marked the second consecutive week that the weekly net outflow has declined.
Outflows peaked at a record $4 billion during the week that ended Jan. 19. The latest outflow was the lightest since early December. "The number is definitely trending down, which is a good thing," said Dan Solender, director of municipal investments at Lord Abbett.
Many fund managers believe much of the cash escaping the industry since November is the very same "hot money" that flooded in during a two-year hunt for yield. According to the Investment Company Institute, municipal bond funds reported $21.06 billion of outflows for the final two months of 2010, and another $12.9 billion in January, based on preliminary data. The outflows of the past three months represent a third of the $101 billion of inflows in the 22 months before that.
