Consistent Net Inflows for Municipal Bond Mutual Funds for the Year to Date

After experiencing only its second annual net outflow in the last ten years in 2013, municipal bond mutual funds have seen investors put money into the group at a consistent pace in 2014.  For the year to date municipal bond mutual funds have positive net flows of $14.2 billion after having $63.5 billion net outflows the year before.  The group currently has a streak of seven consecutive weeks of positive flows and has experienced net inflows in 31 of the 38 weeks this year.

Driving this year’s net inflows have been mutual funds in Lipper’s National Municipal Bond fund categories.  As evidenced by the chart below national muni bond funds have consistently been the driver of positive net flows for the muni bond group.  Single state muni funds have received less favorable attention from investors and have actually had net outflows in four out of the last five years.  National muni bond funds have taken in $17.5 billion in 2014 with the two largest contributors being funds in the Intermediate Muni Debt Funds (+$9.0 billion) and High Yield Muni Debt Funds (+$6.9 billion) categories.  Lipper defines Intermediate Muni Debt funds as funds that invest primarily in municipal debt issues rated A or higher with dollar-weighted average maturities of five to ten years while High Yield Muni Debt funds equate to funds that typically invest 50% or more of their assets in municipal debt issues rated BBB or less.