(Reuters) – U.S. bond funds have drawn record inflows this year, despite concerns about inflation and expectations that the Federal Reserve may reverse its pandemic-era stimulus measures earlier.
According to data from Refinitiv Lipper, US bond funds have attracted a net amount of $ 612 billion in the first eleven months of this year, already surpassing the record inflow of $ 486.18 billion recorded in 2019.
At the same time, US equity funds posted net inflows of $ 248.81 billion after two years of outflows.
The increase in inflows to U.S. bond funds, despite a rally in equities, highlights an investor preference for safety and stable returns in the second year of the COVID-19 pandemic.
Lipper data showed that US equity funds have returned 16.4% on average so far this year, compared to 0.8% for bond funds.
(Chart: flow of funds to US equity bonds and the money market,)
U.S. taxable bond funds attracted a record $ 465.89 billion in net purchases while municipal bond funds secured purchases of $ 96.5 billion.
US short / mid-range investment grade funds recorded inflows of $ 242.22 billion, an increase of 12% in the first 11 months of 2020, US general taxable fixed income funds received 113.35 billion dollars, a threefold increase, while inflation-protected funds attracted a record $ 70.77 billion.
(Chart: Flows to US bond funds,)
Among equity funds, financials are on track for their first annual inflows in four years, totaling $ 23.91 billion at end-November, while investors bought tech funds worth $ 22.22. billions of dollars.
Meanwhile, US money market funds are expected to experience a fifth consecutive year of inflow with net inflows of $ 266.36 billion to date.
(Chart: cash flow to US growth and value funds,)
In the week ended December 8, U.S. bond funds attracted a net $ 4.83 billion, although equity funds recorded outflows of $ 6.46 billion after net purchases of $ 7.87 billion the week before.
(Chart: Flows to funds in the US equity sector,)
Report by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kirsten Donovan