uploads///US High Yield Bond Fund Flows

Inflows in high yield bond funds remain positive, but fall


Mar. 5 2015, Updated 4:05 p.m. ET

Investor flows in high yield bond mutual funds

Net inflows in junk bond mutual funds were positive for the fourth successive week. According to Lipper, net inflows totaled $1.08 billion in the week ending February 27, 2015. This represents a decrease of over 32% week-over-week—the second consecutive week in which inflows fell.

Net inflows came in at $1.6 billion in the week ending February 20. Inflows are up by $9.8 billion year-to-date (or YTD).

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Yields and spreads analysis

Both yields on high yield (HYG) debt and the spreads between high yield debt (JNK) and Treasuries (TLT) (IEF) fell over the week ending February 27. High yield debt yields, as represented by the BofA Merrill Lynch US High Yield Master II Effective Yield, fell by 20 basis points to end the week at 5.97%.

The Option Adjusted Spread (or OAS) also fell. The BofA Merrill Lynch US High Yield Master II Option-Adjusted Spread decreased by 10 basis points to come in at 4.43% on February 27.

Returns on high yield debt indices and ETFs

Bond yields and prices move in opposite directions. Due to the fall in yields, returns on high yield debt were positive in the week ending February 27. The BofA Merrill Lynch US High Yield Master II Index increased by ~0.7% over the week. Returns in 2014 are positive overall, with the index up by 3.0% until February 27.

Popular ETFs providing exposure to high yield debt were slightly higher over the week. The prices of the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), the PowerShares Fundamental High Yield Corporate Bond ETF (PHB), and the SPDR Barclays Capital High Yield Bond ETF (JNK) rose by 0.5%, 0.6%, and 0.6%, respectively, over the week ended February 27.

Bonds issued by HCA Holdings (HCA), Sprint Corporation (S), and Community Health Systems (CYH) figure among the top holdings in HYG and JNK.


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