Bond funds worldwide attract $4.3-bn inflows over week: BofA

Fund investors worldwide poured $4.3 billion into bond funds in the week ended June 4, while pulling cash out of stock funds despite weaker performance in bonds, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The inflows marked the 13th straight week of net new demand for bond funds. Emerging market bond funds attracted $2.2 billion, marking their biggest inflows since January 2013, while investment-grade bond funds attracted $2.4 billion to notch their 24th week of inflows.

Floating-rate debt funds, which are protected from rising interest rates, posted $1.2 billion in outflows, marking their biggest outflows since August 2011.

Investors pulled a net $2 billion out of stock funds, reversing $1 billion in inflows over the prior week. Funds that specialize in US stocks, however, attracted $1.2 billion in inflows, marking their first inflows in three weeks.

The bigger inflows into bond funds marked the third straight week in which demand for the funds exceeded demand for stock funds, despite weaker performance from bonds over the week.

Over the week ending June 4, US Treasuries yields, which move inversely to prices, rose to 2.6 per cent, marking their highest level in three weeks. Global equity markets hit an all-time high.

Demand for funds that specialize in European stocks rebounded to $1.3 billion in inflows after the previous week's $200 million in outflows broke a record 47 consecutive weeks of inflows into the funds.

Stock mutual funds posted $8 billion in outflows, while stock exchange-traded funds attracted $6 billion in inflows, according to the report, which also cited data from fund-tracker EPFR Global. Mutual funds are commonly purchased by retail investors, while ETFs are thought to represent the behavior of institutional investors.

Mutual funds are commonly purchased by retail investors, while ETFs are thought to represent the behavior of institutional investors.

Funds that mainly hold emerging market stocks posted $300 million in outflows, marking their first outflows in four weeks. Precious metals funds also lost favor and posted $700 million in outflows, marking their biggest outflows since January.