Investors Continue Muni Fund Exodus
NEW YORK ( TheStreet) -- The municipal bond sell-off continued last week, with investors pulling $5.75 billion out of such funds, according to data released on Wednesday.
The Investment Company Institute, which tracks flows in long-term mutual funds, said that investors put a net $4 billion into the market during the week ended Jan. 19. $4.6 billion of that went toward stocks, $3.6 billion went toward taxable bonds and $1.6 billion went into hybrid bond-and-equity funds.
Municipal bonds was the only category from which investors withdrew money. Investors have removed $30.5 billion from municipal-bond mutual funds since the start of November, when concerns about local budgets started gaining traction.
The sell-off has been attributed to comments by well-known financial analyst Meredith Whitney after she predicted in September that dozens of municipalities would default on hundreds of billions of outstanding bonds this year.Whitney isn't alone. As municipal budget issues have piled up - and speculation over states' creditworthiness has increased - JPMorgan Chase (JPM) CEO
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