Investment Company Institute: Funds are Pouring Money into Bonds

Inflows into bond funds hit the highest level in seven years.

The Investment Company Institute cited the largest outflows of capital from mutual funds and ETFs since September. During the first full week of 2020, fund investors pulled $13.1 billion out of the vehicles.

Investment Company Institute Data

The Investment Company Institute said that roughly $24.7 billion shifted into funds that hold taxable and municipal debt. That was the largest weekly inflow into bonds since 2013.

The outflows weren’t surprising given the performance of the S&P 500. The index finished the year up roughly 30%. A lot of investors are starting to worry that the markets are moving into the over-valued territory. The S&P 500 is already up 2% during the first two weeks of the year.

Markets did hit a new record Wednesday, despite news of the outflows. Investors have been increasingly optimistic about the U.S.-China trade deal, the de-escalation with Iran, and the uptick in stimulus efforts around the globe.

ICI said that investors are becoming increasingly positive about foreign markets. Last week, net inflows into global stock funds totaled $260 million. That figure was actually the smallest total for these foreign inflows over the last month.

The outflows are a pittance compared to the global stock and bond markets. ICI says that the global stock and bond universe now sits at $190 trillion.

Related: Alternative Investments: Breaking Down the BlackRock 2020 Forecast

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