ICI: bond mutual funds recorded US$28.1 billion outflow

By IVCPOST Staff Reporter

Jul 06, 2013 07:29 AM EDT

Investors in mutual funds headquartered in the United States withdrew US$28.1 billion from bond reserves. The latest weeks' activity was due to the increase in interest rates as worries also rose due to US Federal Reserve's plans. The record came from the Investment Company Institute on Wednesday.

In June 26, the expenses from bond mutual funds stopped. This was the worst situation since the weekly record started in January 2007. The municipal bond funds were also hurt by record outflows of US$7.68 billion within the week.

The venture capitalists pulled their cash out of bond funds while the interest rates increased. This made fixed-income securities susceptible to price losses. Between the start of May and the last day of June, the profits on the benchmark 10-year US treasury record climbed by 81 basis points. This was equivalent to 2.49%. As the earnings increase, the prices plunge.

"This is about what we would have expected with the kind of interest rate increases we have seen during the past two months," Brian Reid, chief economist at ICI, said.

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