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High-yield bond funds extend outflow streak - BAML
November 23, 2017 / 11:26 AM / in 20 days

High-yield bond funds extend outflow streak - BAML

LONDON, Nov 23 (Reuters) - Investors yanked $2 billion from high-yield bond funds over the past week, the fourth straight week of outflows, Bank of America Merrill Lynch data showed on Friday, as they took profits in an asset class that has yielded double-digit returns this year.

With cracks appearing to widen in some emerging markets, notably Turkey, investors booked profits, though outflows were moderated by a strong outlook for global growth.

An index measuring the performance of high-yield debt has delivered 11 percent returns so far this year, outstripping its investment grade and government debt counterparts.

But with yields on some high-yield bonds falling to record lows, some investors are becoming cautious. For example, an index of European high yield debt is trading one standard deviation below its five-year average, according to Thomson Reuters data.

Equities saw strong inflows, with Japan cornering the lion’s share followed by Europe.

Third quarter economic growth in the euro zone exceeded the United States, and the full-year print is expected at 2.2 percent compared with a forecast of 1.4 percent this time last year.

Overall, $7.4 billion of funds moved into equities for the week ending Nov. 21.

BAML’s data showed overall equity allocations were at 60 percent, below a peak of 63 percent in March 2015. (Reporting by Saikat Chatterjee; editing by John Stonestreet)

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