uploads///US High Yield Bond Fund Flows

Outflows in High-Yield Funds Fell, Yield on High-Yield Bonds Rose

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Dec. 4 2020, Updated 10:43 a.m. ET

Investor flows in high-yield bond funds

The investor flows in high-yield bond funds were negative last week. According to Lipper, the net outflows from high-yield bond funds totaled $0.5 billion in the week ending November 25—compared to net outflows of $1.4 billion in the week ending November 18. With this outflow, high-yield bond funds witnessed reduced inflows of $8.0 million on a YTD (year-to-date) basis.

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Yields and spreads analysis

The yields on high-yield debt and the spreads between high-yield debt and Treasuries rose over the week ending November 27. High-yield debt yields, as represented by the BofA Merrill Lynch U.S. High Yield Master II Effective Yield, rose by three basis points from a week ago to 8.1%.

Like yields, the OAS (option-adjusted spread) also rose during the week. The BofA Merrill Lynch U.S. High Yield Master II Option-Adjusted Spread rose by six basis points from last week to end at 6.4% on November 27.

Returns on high-yield debt indices and ETFs

Bond yields and prices move in opposite directions. With yields rising, the returns on high-yield bonds fell in the week ending November 27. The BofA Merrill Lynch U.S. High Yield Master II Index fell 0.1% over the week. In 2015, the returns remained negative. The index fell by 2.3% until November 27.

The popular ETFs providing exposure to high-yield debt rose over the week ending November 27. 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 High Yield Bond ETF (JNK) rose 0.8%, 0.1%, and 0.3%, respectively.

Last week, in the primary market, M/I Homes (MHO) was the only issuer. You can read more about the primary market activity in Part 3 of this series.

However, in the previous week, Equinix (EQIX), Sally Beauty—a subsidiary of Sally Beauty Holdings (SBH), Ally Financial (ALLY), and LifePoint Health (LPNT) were among the major issuers.

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