April 25, 2019 / 8:17 PM / 3 months ago

UPDATE 2-Investors take 'Spring Break' from risk assets, pulling cash from junk-bond funds

 (Adds flow figures for domestic equity funds and
investment-grade corporate bond funds, table)
    By Jennifer Ablan
    April 25 (Reuters) - Investors took a break from their
buying binge of risk assets in the week ended Wednesday, as
U.S.-based high-yield junk bond funds posted $520 million in
cash withdrawals, according to Refinitiv’s Lipper research
service data on Thursday. 
    U.S.-based equity mutual funds posted $3.64 billion of cash
withdrawals in the week ended Wednesday, extending their weekly
outflows since mid-February, Lipper said.
    It added that U.S.-based equity exchange-traded funds posted
$3.68 billion of cash withdrawals in the week ended Wednesday,
marking their first weekly outflow since late March.
    U.S.-based domestic equity funds posted over $7.5 billion in
net cash outflows in the week ended Wednesday, following two
weeks of inflows totaling $9.3 billion, according to Lipper
data.
    "High-yield funds did suffer net outflows, but the lion’s
share of those outflows came from one ETF," said Pat Keon,
senior research analyst at Lipper. He pointed out that the
iShares iBoxx $ High Yield Corporate Bond ETF had net
outflows of $382 million, which was a major contributor to the
latest week's cash withdrawals.
    "This bears watching; I would suspect the negative flows
from high yields is more of a one-week aberration than the
reversal of the current trend," Keon said. 
    High-yield debt correlates more to equities than other
taxable bonds - due to having more risk than investment-grade
debt, Keon said. "I would expect the recent round of positive
data - retail sales data hitting its highest level in 18 months,
unemployment claims at its lowest level in almost 50 years, and
solid corporate earnings results - should carry the equity
markets and pull high yield-debt along for the ride," Keon said.
    Higher up in the quality curve, U.S.-based investment-grade
corporate bond funds enjoyed another week of inflows.
    For the week ended Wednesday, U.S.-based investment-grade
corporate bond funds attracted $5.86 billion of net cash in week
ended Wednesday, extending their weekly inflows since
mid-January, Lipper data shows. Overall, U.S.-based taxable bond
funds attracted roughly $6.4 billion in the week ended
Wednesday, their seventh straight week of inflows, Lipper said.
    The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:
 Sector                  Flow Chg     %       Assets     Count
                         ($Bil)       Assets  ($Bil)     
 All Equity Funds        -7.328       -0.10   7,319.934  11,790
 Domestic Equities       -7.503       -0.15   5,215.594  8,387
 Non-Domestic Equities   0.176        0.01    2,104.340  3,403
 All Taxable Bond Funds  6.396        0.22    2,865.699  5,819
 All Money Market Funds  4.260        0.15    2,917.421  1,003
 All Municipal Bond      1.576        0.35    454.398    1,345
 Funds                                                   
 
 (Reporting by Jennifer Ablan; editing by Jonathan Oatis and Tom
Brown)
  
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