Thomson Reuters Lipper data shows $4.1 billion pulled from taxable mutual bond funds in the U.S.

The data captures market sentiments from across a broad spectrum of industries and political happenings and provide an insight into investor sentiments.

As per last week’s Lipper data, investors have pulled $4.1 billion from U.S.-based taxable-bond mutual funds. The bond selling spree has fuelled higher interest rates, rattling investors.

“Investors are pulling the trigger and are starting, maybe, the rotation out of bond funds,” said Tom Roseen, head of research services for Thomson Reuters Lipper.

Municipal bond funds have lost $2.1 billion to redemptions.

Investment-grade corporate bonds have posted $1.3 billion in outflows during the last week through November 30.

Before interest rates started their upward rise, both categories of bonds had been popular with investors. Expectations of President-elect Donald Trump stoking inflations have pushed the bond market even higher. Furthermore, the Federal Reserve is expected to raise interest rates later this month.

As per the Lipper data, the $4.1 billion outflow from mutual funds was partially offset by $1.1 billion in opportunistic taxable-bond buying by exchange-traded funds.

While bonds that invest in inflation protected government debts took in $156 million, high-yielding “junk” bond funds took in $342 million.

Interestingly, loan participation funds took in $339 million and delivered a 3rd straight week of solid performance.

“They’re being selective,” said Roseen vis-à-vis their commendable performance.

The data showed investors extending a withdrawal from European funds this year, with $335 million pulled last week.

Italy is facing a constitutional reform which could lead to the resignation of Prime Minister Matteo Renzi and in turn trigger turmoil in the country’s battered banking sector and push the Eurozone towards the edge of a cliff.

Helped by a falling yen and rising stock, Japanese stock funds in the United States have raked in $158 million in a third straight week of inflows, as per the Lipper data.

Notably fund investors appeared to be betting against a deal by oil producers which could lead to more stable prices, said Roseen. Investors pulled $450 million from energy-sector funds.

However, with OPEC producers agreeing on its first oil production reduction since 2008, the deal came through.

Overall during this week, stock funds in the United States posted $961 million in outflows, as per the Lipper data, with the sell-off by mutual fund partially offsetting ETF inflows.

Money market funds, which are relatively low risk, took in a whopping $10.6 billion.


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