U.S. High-Yield Funds See Biggest Cash Outflow Since July

U.S. junk-bond funds suffered the largest cash exit since July, as investors turn to other assets amid rising rates and sagging returns.

High-yield buyers pulled $5.33 billion out of retail funds during the week ended March 10, according to Refinitiv Lipper. It’s the biggest withdrawal since $5.55 billion was yanked in the reporting period ended July 1 and the fifth-largest outflow on record, Bloomberg-compiled data show.

Funds that invest in the risky debt briefly swung to an inflow of $601.4 million last week, according to Refinitiv Lipper. Investors had pulled money for three consecutive weeks before that.

Although buyers continue to make a beeline to new high-yield bond offerings, conditions in the market have been softening as concerns about corporate credit mount. A key index that measures returns recently suffered a five-day stretch of losses while average yields approached a three-month high earlier this week before declining two basis points on Wednesday to close at 4.43%.

The cash exit comes after investors also pulled back from U.S.-listed fixed-income exchange traded funds last week. Corporate bond ETFs led the outflows, which showed a $3.86 billion net withdrawal from high-yield bond funds in the period ended March 9. Three junk-bond ETFs did lure about $2 billion of inflows in a single session on Wednesday, however.

Meanwhile, U.S. investment-grade funds saw a $3.31 billion inflow, according to Lipper. Cash has now been added for 18 consecutive weeks.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.