April 19, 2018 / 11:09 PM / a month ago

UPDATE 1-U.S. 'junk' bond funds take in most weekly cash since 2016 -Lipper

 (Adds details on funds, byline, table)
    By Trevor Hunnicutt
    NEW YORK, April 19 (Reuters) - Investors stormed back into
the market for the riskiest corporate debt during the latest
week, Lipper data showed on Thursday, pumping the most cash into
U.S.-based, high-yield bond funds in over 16 months.
    The resurgence in demand for high-yield bonds, which carry
low credit ratings and are seen as speculative investments,
bodes well for stocks still in the early days reporting their
quarterly earnings to Wall Street.
    Stocks and high-yield bonds often trade in sympathy with one
another, and high-yield bonds are sometimes seen as an indicator
of what stocks will do next.
    Pat Keon, senior research analyst for Thomson Reuters' 
Lipper unit, said investors are starting to take on risk in
financial markets after bouts of volatility this year triggered
by concerns about U.S.-China trade relations, inflation and
rising rates - each of which seemed poised to derail nearly a
decade of U.S. stock market gains.
    U.S.-based "junk" bond funds took in $3 billion during the
seven-day period through Wednesday, the largest weekly figure
since December 2016.
    "People are taking money off the sidelines and putting it
into play," in financial markets, said Keon.
    Money-market funds, where investors park cash, recorded
$34.9 billion in withdrawals during the week, the most since
March 2016.
    Demand from fund investors helped pushed bond yields
downward - and prices upward - on the high-yield U.S. corporate
debt.
    Yields on junk bonds are near their lowest levels since the
2007 start of the global financial crisis, compared against
low-risk bonds, according to statistics gathered by
Intercontinental Exchange Inc.
    Overall, taxable bond funds took in $6.3 billion and stocks
took in $4.6 billion, Lipper said. Emerging-market equity funds,
which attracted $1.3 billion during the latest week, are yet to
post a single week of withdrawals this year.
    Within stocks, energy sector funds posted $405 million in
withdrawals after three straight weeks netting cash. Economic
growth and higher oil prices would normally boost the equities,
but S&P 500 energy sector stocks sport the highest
price-to-earnings ratios based on profits Wall Street analysts
expect over the coming 12 months, according to Credit Suisse
Group AG.
    Rate-sensitive real estate sector funds reeled in $208
million after three consecutive weeks of withdrawals, Lipper
said.
    The following is a breakdown of the flows for the week,
including mutual funds and ETFs:
 Sector                    Flow Chg  Pct of    Assets     Count
                           ($ blns)  Assets    ($ blns)   
 All Equity Funds            4.595    0.07     6,994.738  12,111
 Domestic Equities           3.289    0.07     4,704.833   8,598
 Non-Domestic Equities       1.306    0.06     2,289.905   3,513
 All Taxable Bond Funds      6.314    0.23     2,739.914   6,040
 All Money Market Funds    -34.902   -1.30     2,647.066   1,038
 All Municipal Bond Funds   -0.515   -0.13       400.823   1,458
 
 (Reporting by Trevor Hunnicutt; additional reporting by Kate
Duguid; editing by Jennifer Ablan and G Crosse)
  
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