This time, it's the companies -- not the investors -- that are following the money.In June, equity mutual funds recorded net outflows of $11.1 billion, while taxable bond funds saw inflows of $11.4 billion, according to AMG Data Services. And corporate America has duly noted this shift. Anxious to raise capital by any means, companies have begun to issue bonds targeted at the retail investor. (Generally, bonds are sold first to institutional investors, then to individuals on the secondary market.) Meanwhile, the National Association of Securities Dealers just launched the first-ever
You're the TargetThe appeal that companies are making to individual investors in marketing new bond issues has (surprise!) an ulterior motive. "Institutions aren't buying any bonds and keeping companies afloat," says RealMoney Pro's Brian Reynolds, formerly a fixed-income portfolio manager and economist at David L. Babson & Co. "This kind of tactic -- targeting individuals -- can be great for companies." This new breed of corporate bond, issued by the likes of IBM ( IBM), United Parcel Service ( UPS) and Boeing ( BA), is designed to appeal to individuals in a few ways. For starters, many of them pay interest monthly, an attractive feature for those who are looking for a steady and predictable income. Bond funds sometimes have irregular payouts. The bonds are generally medium-term notes with durations of two to 10 years -- which means investors incur less interest-rate risk and get the bond's par value back soon. And they're sold in small blocks -- for instance, investors can purchase IBM's five-year note in $1,000 increments. These bonds can be purchased through online, discount and traditional brokerages.