uploads///US Investment Grade Bond Fund Flows

Investment-Grade Bond Funds Witnessed Inflows in October


Nov. 23 2015, Updated 6:05 a.m. ET

Investor flows

The flows into investment-grade bond funds were positive up to the week ending October 28, 2015. According to Lipper Fund Flow data, investment-grade bond funds saw net inflows of $1.3 billion up to the week ending October 28—compared to outflows of $9.7 billion up to the week ending September 30, 2015.

The investment-grade bond funds have seen YTD (year-to-date) net inflows of $14.7 billion up to October 28, 2015.

The investment-grade bond issuance rose by 17.4% last week to $132.6 billion in October—compared to $112.9 billion in the previous month.

In October, Microsoft (MSFT), Goldman Sachs (GS), EDF SA, Fidelity National Information Services (FIS), and PepsiCo (PEP) were among the biggest investment-grade bond issuers. You can read the details of some of these issues in Part 4 of this series.

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Yield and spread analysis

Yields fell by three basis points from the previous month and ended at 3.40% on October 30, according to the BofA Merrill Lynch US Corporate Master Effective Yield.

The yields fell on a month-over-month basis. The monthly return, from September 30 to October 30, on the Prudential Total Return Bond Fund – Class A (PDBAX) rose marginally by 0.07%.

Like yields, the OAS (option-adjusted spread) also fell by 13 basis points month-over-month. It ended at 1.7% on October 30. The OAS measures the average difference in yields between investment-grade bonds and Treasuries. A fall in this spread implies that the risk of high-grade bonds relative to Treasuries fell.

For more analysis on mutual funds, please visit Market Realist’s Mutual Funds page.


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