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Market Extra: Municipal-bond ETF inflows post another record

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Municipal-bond exchange-traded funds took in the most money on record in the week ending June 16, as investors continue to snatch up debt issued by U.S. local governments.

Muni ETF inflows totaled $704 million, according to Refinitiv Lipper, the biggest weekly haul since September 2007, when those records begin. It was their sixteenth straight week of inflows.

One fund, the iShares National Municipal Bond ETF
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took in nearly half of the weekly total at $316 million. The fund has posted a total return of 1.17% in the year to date, according to FactSet data.

Related: ‘Food fight’ in the municipal-bond market as demand devours all supply

Investors have flocked to municipal bonds this year as the prospect of tax increases gathers pace. Unlike sovereigns and corporate bonds, munis offer tax advantages. What’s more, the local governments that issue the bonds aren’t just good credit risks: in some cases, they have more money than they know what to do with.

Demand for munis has been so strong that one mutual fund recently closed to new investors. Refinitiv Lipper data show that such funds had their eleventh consecutive week of inflows, picking up $1.1 billion in the most recent week.

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