uploads///US Investment Grade Bond Fund Flows

Investment-Grade Bond Funds Continue to Witness Inflows


Dec. 4 2020, Updated 10:50 a.m. ET

Investor flows

Flows into investment-grade bond funds were positive for the fifth consecutive week. According to Lipper fund flow data, investment-grade bond funds saw net inflows of $1.0 billion during the week ending April 6—compared to net inflows of $112.3 million in the week ending March 30.

Investment-grade bond funds saw year-to-date net inflows of $500.7 million up to April 6, 2016.

Investment-grade bond issuance rose from $18.4 billion in the previous week to $25.3 billion last week.

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In the week to April 8, BMW US Capital, LLC—a subsidiary of BMW AG, Mizuho Financial Group (MFG), Toyota Motor Credit Corporation—a financial subsidiary of Toyota Motor (TM), and Target (TGT) were among the large issuers of investment-grade bonds. You can read the details of these issues in Part 4 of this series.

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 fell across the yield curve as global economic uncertainty returned along with oil woes. Investment-grade corporate bond yields also fell last week.

The yields fell by 7 basis points and ended at 3.1% on April 8, according to the BofA Merrill Lynch US Corporate Master Effective Yield.

The Hartford Total Return Bond HLS Fund – Class IA (HIABX) and the John Hancock Bond Fund – Class A (JHNBX) rose by 0.4 and 0.3%, respectively, last week.

Like yields, the OAS (option-adjusted spread) fell by 1 basis point and ended at 1.70% on April 8. The OAS measures the average difference in yields between investment-grade bonds and Treasuries. A fall in the spread implies that the risk of high-grade bonds relative to Treasuries decreased.

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


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