Despite signs that the market was becoming more stable, municipal bond exchange traded funds (ETFs) and mutual funds suffered their largest outflows ever last week.
Investors nabbed $4 billion out of municipal bond funds; the last record for outflows was set in November, when the funds lost $3.1 billion.
That brings the 10-week losing streak total to $20 billion, says Ignites.
The outflows continue even though a majority of advisors, portfolio managers and economists don’t believe that a slew of defaults will occur. They do acknowledge that the probability of defaults has gone up, writes Jessica Toonkel for Investment News. Only $8.2 billion in muni defaults has come to pass in a $2.8 trillion market as of Dec. 10, said MMA managing director Matt Fabian, and only three defaults have occurred this year.
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