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Originally published Saturday, March 1, 2014 at 8:01 PM

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Bond mutual funds hot with investors again

Bond mutual funds attracted $2.9 billion in the week ended Feb. 19, the Investment Company Institute said, the highest contribution to bond funds since last May.


Bloomberg News

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Investors poured more money into bond mutual funds in a one-week period than they have since last May.

That was before former Federal Reserve Chairman Ben Bernanke first signaled the central bank would reduce asset purchases.

Bond mutual funds attracted $2.9 billion in the week ended Feb. 19, the Washington-based Investment Company Institute said in a statement this past week.

The total was the highest contribution to bond funds since the week ended May 22, ICI data show.

Bernanke on that date told Congress that the bank might start reducing its bond- buying program.

That touched off an increase in interest rates and a flight from bond mutual funds.

The Federal Reserve in December said it would trim its monthly purchases to $75 billion from $85 billion.

The yield on the 10-year Treasury note climbed to 3.03 percent by Dec. 31 from 1.93 percent May 21, according to data compiled by Bloomberg.

Yields have since fallen to 2.69 percent.

Bond mutual funds in the U.S. posted record investor withdrawals of $83.4 billion last year, according to the ICI.

Taxable bond funds won $2.5 billion in the week ended Feb. 19, while municipal bond funds attracted $422 million.

Mutual funds that buy domestic stocks received $4.1 billion from investors.

International stock funds added $1.7 billion.



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