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European high yield bond funds see €166M investor cash inflow

J.P. Morgan’s weekly analysis of European high-yield funds shows a €166 million inflow for the week ended Dec. 11. This includes a €140 million net inflow for short-duration funds, and a €19 million outflow to ETFs. The reading for the week ended Dec. 4 is revised from an inflow of €270 million to a €269 million inflow. The latest reading is the fourteenth consecutive weekly inflow.

The provisional reading for November is a €1.42 billion inflow, which is the ninth month this year for which net inflows have been recorded, and the fourth to record an inflow greater than €1 billion. The largest monthly inflow was €1.8 billion in January, while the largest monthly outflow was €2.4 billion, tracked in June.

The latest estimate for total inflows this year through November is €6.76 billion, versus €6.06 billion for the comparable period last year.

High-yield primary has now closed for the year, but money continues to pour into funds – most notably short-duration funds – and this should mean the positive technical picture continues into the start of next year. Funds are now winding down for Christmas too, with secondary liquidity almost non-existent, as books close with returns in the 8-10% region for the year, according to a selection of fund managers.

In the U.S., retail cash flows to high-yield funds returned to positive territory with a net inflow of $16 million for the week ended Dec. 11, according to Lipper, a division of Thomson Reuters. An inflow of $108 million to mutual funds outweighed an outflow of $92 million from exchange-traded funds. The net inflow, however, barely dents the week prior’s $141 million outflow, which broke a streak of three straight positive readings. Inflows total $2.6 billion for the year to date, with ETF inflows comprising 73% of the total, at $1.9 billion.

Meanwhile, retail cash inflows to bank loan mutual funds and exchange-traded funds totalled just $462 million for the week ended Dec. 11, according to Lipper. That is the third-smallest inflow of the year. Year-to-date inflows total $51.1 billion, of which 10% is tied to ETFs.

As reported, J.P. Morgan only calculates flows for funds that publish daily or weekly updates of their net asset value and total fund assets. As a result, J.P. Morgan’s weekly analysis looks at around 50 funds, with total assets under management of €10 billion. Its monthly analysis takes in a larger universe of 90 funds, with €27 billion of assets under management. For a full analysis, please see “Europe receives HY fund flow calculation.” – Luke Millar