Retail cash flows for U.S. high-yield funds were positive $315 million for the week ended April 1, down from positive $856 million last week, according to Lipper. Both were essentially all related to the exchange-traded-fund segment, with this week’s ETF inflow of $318 million dented by a small, $3 million outflow from mutual funds.
The two-week inflow total of approximately $1.2 billion follows two weeks of outflows totaling $3 billion in mid-March. Those were the first outflows after six weeks of heady inflows.
Even with the fresh inflow this week, the trailing-four-week average holds fairly steady, at negative $446 million per week, from negative $448 million per week last week, as an inflow five weeks ago was essentially the same as this week’s inflow. Recall that the trailing-four-week reading of positive $2.5 billion seven weeks ago was the largest in this measure on record.
While high-yield bond followers are seemingly caught between a rock and a hard place as interest rates may be poised to pick up, some expert investors are positing that high yield positioning is precisely the tactical approach to maintain.. The following MarketsMuse.com fixed income fix is courtesy of contributed article “5 Reasons to Hold High Yield” from Philadelphia-based RIA Clark Capital Management Group’s Chief Investment Officer, Sean Clark, CFA.
Editor Note: Before any MarketsMuse followers pooh-pooh the notion that spreads are bound to widen (and in turn, disrupting HY bond exposure), Clark Capital has been successfully navigating fixed income markets since 1986 and currently has $3billion AUM. The firm recently launched Navigator® Tactical Fixed Income Fund.
“The high yield market was bloodied in the second half of last year, primarily due to the collapse in energy prices.While yields and spreads backedup,broader-based credit remained firm, suggesting that it was an isolated problem due to the collapse of the energy market.We believe that the high yield market will reward investors who adopt a tactical approach.Below are five reasons we anticipate a reemergence of opportunities in the high yield space in 2015: Continue reading →
In a column filed through SFGate, Bloomberg LP’s Joe Ciolli reports, “Junk Bond ETFs are drawing the biggest inflows on record from investors seeking easier access to higher-yielding assets. According to Lipper Analytics, ETFs that track junk-bond indexes have tapped $5.5 billion of investments since the beginning of this year, almost quadruple the $1.4billion during the same period of 2011.
While exchange-traded funds comprise 2 percent of the $1 trillion in U.S. corporate speculative-grade debt outstanding, they accounted for more than a third of the total $14.8 billion of inflows this year into mutual funds and ETFs that buy junk bonds.
The use of ETFs makes the market more efficient than investing in mutual funds because they trade throughout the day and give investors a “more appropriate way to tactically approach high-yield,” said Jeff Tjornehoj, head of Americas research at Denver-based Lipper, whose parent company, Thomson Reuters Corp., competes with Bloomberg LP for financial news and information.