Municipal Debt Funds Attract Net New Money From Investors

Feb. 04, 2019 9:26 AM ET2 Likes
Pat Keon, CFA profile picture
Pat Keon, CFA


  • Municipal debt funds had net positive flows of $1.1 billion for the week.
  • Municipal debt funds have taken in $4.4 billion in net new money during January.
  • High Yield Muni Debt Funds have paced the muni group with an increase of $1.6 billion.

Municipal debt funds had positive net flows of $1.1 billion for the fund-flows trading week ended Wednesday, January 30. This was the fourth straight weekly net inflow for the asset group, for a total increase of $4.4 billion. This four-week average of $1.1 billion is the highest for the muni debt fund group in six years, when it posted a four-week average net inflow of slightly more than $1.1 billion for the fund-flows week ended January 30, 2013. The group’s results in January represent a change in investor sentiment, as muni debt funds had suffered through four consecutive monthly net outflows (for a total negative net flow of $13.3 billion) to close out 2018.

Investors appear to have a greater appetite for risk in the muni debt fund space, as the lower rated and longer-term peer groups took in the most net new money in January. Funds in the High Yield Muni Debt Funds group had the largest single net inflow for the month (+$1.6 billion), followed by Intermediate Muni Debt Funds at +$1.4 billion. As per Lipper’s methodology, intermediate funds hold debt that has an effective maturity within the five- to ten-year range. Parsing the data a little further indicates the national muni classifications were responsible for the majority of the net inflows (+$3.7 billion), while single-state muni bond funds contributed $732 million to the total net inflows.

The net inflows were widely dispersed for the month as more than 250 muni bond funds saw their coffers grow in January. The five largest individual net inflows for the month belonged to BlackRock Strategic Municipal Opportunities Fund (+$373 million), Nuveen High Yield Municipal Bond Fund (+$368 million), Goldman Sachs High Yield Municipal Fund (+$296 million), American Funds Tax-Exempt Bond Fund of America (+$222 million), and BlackRock National Municipal Fund (+$210 million).

Municipal Bond Funds (including both mutual funds and ETFs) Monthly Net Flows ($Bil), September 2018 through January 2019

This article was written by

Pat Keon, CFA profile picture
Pat Keon is a senior research analyst at Lipper specializing in U.S fund classifications and portfolio analytics. Pat joined the firm in 2005 and has worked in the research and portfolio groups during his tenure. Pat has earned an MBA from Regis University (Denver, CO) and a Bachelor's from Iona College (New Rochelle, NY).

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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