Investors in U.S.-based mutual funds pulled $4.1 billion out of bond funds in the week ended June 17, marking the biggest outflows from the funds since mid-December, data from the Investment Company Institute showed on Wednesday.
The outflows marked the second straight week of withdrawals from bond funds, according to the data from ICI, a U.S. mutual fund trade organization.
Funds that specialize in U.S. shares posted $3.5 billion in outflows to mark their 16th straight week of withdrawals, while funds that specialize in international shares continued to draw new demand with inflows of $3.7 billion.
Funds that target international shares have attracted inflows in every week of this year, a trend which analysts have attributed to investors' view that overseas stocks are cheaper than their U.S. counterparts, and that stocks in Europe and Japan will continue to benefit from loose monetary policies in those regions.
"What you are seeing is retail investors reacting to continued headlines and concerns that a Fed tightening is more imminent," said Jonathan Lewis, chief investment officer at Samson Capital Advisors in New York, on the outflows from bond funds.
"This may be an overreaction as the Fed has made abundantly clear that any tightening will be moderate," he said.
Bond yields spiked earlier this month, with benchmark 10-year Treasury yields hitting their highest level since Oct. 1 of 2.5 percent on June 11, following a strong U.S. jobs report for May. The report led traders to move their bets on when the Federal Reserve will start to hike to October.
Hybrid funds, which can invest in stocks and fixed income securities, posted $55 million in outflows to mark their first investor withdrawals in five weeks.