uploads///US Investment Grade Bond Fund Flows

Checking in with Outflows: How Much Did Investment-Grade Bond Funds See Last Week?


Feb. 10 2016, Updated 8:07 a.m. ET

Investor flows

Flows into investment-grade bond funds were negative in the week ending February 5. According to Lipper’s funds flow data, investment-grade bond funds saw net outflows of ~$1.5 billion during the week. This was compared to outflows amounting to ~$1.2 billion in the week ending January 29.

Investment-grade bond funds have seen YTD (year-to-date) net outflows of nearly $5 billion up to February 3, 2016. Investment-grade bond issuance fell last week compared to the previous week. High-grade bond issuance fell by 47.2% to $12.2 billion last week.

In the week to February 5, Home Depot (HD), National Rural Utilities Cooperative Finance Corporation, Starbucks (SBUX), and Praxair (PX) were among large issuers of investment-grade bonds. (You can read the details of these issues in Part 4 of this series.)

Article continues below advertisement

Yield and spread analysis of corporate high-quality debt securities

Investment-grade bond yields usually follow cues from the Treasuries market. Last week, Treasury yields came in at the intermediate and long end of the yield curve. But investment-grade corporate bond yields rose marginally during the period.

Meanwhile, yields nudged up by one basis point and ended at ~3.6% on February 5, according to the BofA Merrill Lynch US Corporate Master Effective Yield. By comparison, returns on the Wasatch-1st Source Income Fund (FMEQX) and the American Century Diversified Bond Fund Class A (ADFAX) were up by 0.1% each.

Like yields, the OAS (option-adjusted spread) rose by seven basis points to end at ~2.1% on February 5. The OAS measures the average difference in yields between investment-grade bonds and Treasuries. Thus, a rise in this spread implies that the risk of high-grade bonds relative to Treasuries has increased.

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


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.