Municipal bond trading data for June shows that the market has recovered since Meredith Whitney savaged munis on a “60 Minutes” segment late last year. Yet opinions vary on whether individual bonds or muni bond funds have come back the strongest.
Lipper reported that general municipal-debt funds in June saw more than $3.5 billion in net inflows. Bond funds compared well to the rest of the fund market, Lipper said in a June 30 fund flows release, noting that for the first month in five, investors were net redeemers of fund assets, withdrawing a net $41.8 billion from the conventional funds business, excluding exchange-traded funds.
A $43.1 billion outflow from money market funds and a $19.8 billion outflow from stock and mixed-equity funds swamped net inflows into bond funds, up $21.2 billion, their fifth month of net inflows, Lipper said.
“On the municipal bond funds side, general municipal debt funds (+$3.6 billion, May’s laggard) received the largest net inflows, while single-state municipal debt funds (-$61 million) witnessed the largest net redemptions,” Lipper reported.
Morningstar also reported a rise in municipal bond funds in June, though it came up with a different figure, $1 billion, versus Lipper’s general municipal-debt fund increase of $3.5 billion in net inflows.
“Flows into taxable-bond funds dropped by nearly $9 billion to $11.9 billion, but this drop owed mostly to high-yield outflows. Municipal-bond flows continued to turn the corner, registering nearly $1 billion in inflows,” Morningstar editorial director Kevin McDevitt wrote.
In contrast, BondDesk pointed to the Investment Company Institute’s (ICI) figures of $962 million in net inflows for municipal bond mutual funds during June, which was the first positive month since October 2010.
But while the three firms reported different muni fund flow numbers, all agreed that municipal bond fund sales are thriving. BondDesk, on the other hand, which bills itself as the nation’s largest retail bond trading venue, said that demand for muni funds lagged in June versus demand for individually sold municipal bonds.