By Sam Forgione
NEW YORK (Reuters) - Investors in mutual funds based in the United States pulled $28.1 billion out of bond funds in the latest week as fears persisted that the U.S. Federal Reserve could cut its bond-buying later this year, data from the Investment Company Institute showed on Wednesday.
The outflows from bond mutual funds in the week ended June 26 were the most since weekly records began in January 2007, said ICI, a U.S. mutual fund trade organization. Municipal bond funds also suffered record outflows of $7.68 billion over the week.
The outflows from bond funds came as fears lingered that the Fed might reduce its $85 billion in monthly purchases of Treasuries and agency mortgage securities later this year. Fed Chairman Ben Bernanke reiterated on June 19 that the central bank could reduce its purchases later this year and end them altogether by mid-2014 if the economy looked strong enough.
Stock mutual funds gained meager inflows of $169 million over the week, down from inflows of $1.98 billion the prior week. The benchmark S&P 500 stock index fell 1.6 percent over the reporting period as volatility increased on fears of a reduction in the Fed's accommodative monetary policy.
Inflows of $1.13 billion into funds that hold non-U.S. stocks accounted for the overall inflows into stock funds. Those cash gains were down, however, from inflows of $2.44 billion into the funds the prior week.
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Funds that hold only U.S. stocks had outflows of $962 million over the week, marking the sixth straight week of outflows from the funds. Those outflows were more than double those of the prior week, when investors pulled $457 million out of the funds.
Hybrid funds, which can invest in both stocks and fixed income securities, suffered outflows of $591 million. That marked the first week of outflows from the funds over any full week this year, according to ICI data.
(Reporting by Sam Forgione; Editing by Chizu Nomiyama and Eric Beech)