U.S. bond funds have attracted record inflows throughout 2021, despite worries about inflation and expectations the Federal Reserve could roll back its pandemic-era stimulus measures earlier than expected.
According to Refinitiv Lipper data, U.S. bond funds attracted a net $612B in the first eleven months of this year, already surpassing the record inflow of $486.18B recorded in 2019. Meanwhile, U.S. equity funds saw net inflows of $248.81B after two years of outflows.
Reuters states that “the higher inflows into U.S. bond funds, despite a rally in equities, highlights an investor preference for safety and stable returns during the second year of the COVID-19 pandemic.”
The Lipper data showed U.S. equity funds have delivered a return of 16.4% on average so far this year, compared with 0.8% for bond funds.
U.S. taxable bond funds drew a record $465.89B in net buying while municipal bond funds secured purchases of $96.5B.
Reuters goes on to comment that “U.S. short/intermediate investment-grade funds saw inflows of $242.22B, a 12% increase over the first 11 months of 2020, U.S. general domestic taxable fixed income funds received $113.35B, a three-fold increase, while inflation protected funds attracted a record $70.77B.”
Among equity sector funds, financials are on track for their first annual inflows in four years, totalling $23.91B to the end of November, while investors purchased tech funds worth $22.22B.
Meanwhile, U.S. money market funds are set for a fifth consecutive year of inflows with net inflows of $266.36B so far.
In the week ended Dec. 8, U.S. bond funds attracted a net $4.83B, although equity funds witnessed outflows of $6.46B after net purchases of $7.87B in the previous week.
View our blog for market news and company updates.