Total bond fund flows, including both taxable and tax-free fixed income, had the strongest weekly inflow in six weeks as money continues to come off of the sidelines into both bonds and stocks.
The Investment Company Institute (ICI) has released its mutual fund survey information for the week ending March 6th which relayed another strong week of inflows by investors into bonds. For the five day period ending March 6th, total bond mutual funds took in $6.4 billion, the strongest week in the past month and a half. The result was an improved tally from the $4.9 billion of the week prior and over $1.0 billion better than the 12 week average inflow of $5.2 billion, a more important intermediate term trend.
With the latest weekly inflow into all fixed income mutual funds, every week thus far in 2013 has experienced new money flow from investors. The year to date start by fixed income is tracking slightly below the same period last year. In the first 9 weeks of 2012, investors deposited $68.2 billion into fixed income versus the running year-to-date tally of $58.6 billion thus far in ’13. The current total for this year, however, is much better than the years of 2008, 2009, and 2011 which had $38.1 billion, $35.7 billion, and $9.7 billion in investor inflow, respectively, during the same time period.
The investor mix between taxable and tax-free or municipal bond funds continued to favor the taxable category during the week with $6.0 billion in fund flows into taxable bonds versus $361 million into tax-free bonds. The weekly inflow into the municipal category was the lowest inflow in nine weeks with breaking national news of continued struggles in the state of Illinois, now reported as the low rated state in the nation during the week and charges of mismanagement of state pensions.
The leading public bond fund managers are Legg Mason (LM) with over 50% of its client assets in fixed income. BlackRock (BLK) and Franklin Resources (BEN) also have industry leading fixed income franchises.