GRAPHIC-U.S. bond funds post biggest weekly outflow in three months

BY Reuters | ECONOMIC | 09/30/22 08:00 AM EDT

Sept 30 (Reuters) - U.S. bond funds witnessed massive outflows in the week to Sept. 28 as investors girded for further rates hikes from the Federal Reserve to control stubborn inflation.

Investors withdrew a net $9.08 billion out of U.S. bond funds, marking their biggest weekly net selling since June 22, Refinitiv Lipper data showed.

The benchmark U.S. Treasury 10-year yields, which move inversely to prices, briefly jumped to 4.019% on Wednesday, the highest since Oct. 2008.

Outflows from U.S. short/intermediate investment-grade and high-yield bond funds surged to $6.28 billion and $3.2 billion respectively from $3.59 billion and $1.81 billion in the previous week.

Government bond funds however, received $6.92 billion, marking their biggest weekly inflow since May 18.

Meanwhile, U.S. equity funds witnessed disposals of $4.86 billion after a weekly net purchase worth $3.99 billion.

Growth and value were both out of favour with net outflows of $4.28 billion and $2.04 billion respectively.

Among sector specific funds, industrials, healthcare and financials suffered net selling of $740 million, $632 million and $529 million respectively.

Meanwhile, safer money market funds obtained a net $3.74 billion in a second straight week of net buying.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Chizu Nomiyama)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.