US high-yield bond funds attract $1.26B of inflows amid strong market gains

U.S. high-yield retail funds reported inflows totaling $1.26 billion for the week to Dec. 8, following on cumulative outflows of nearly $6 billion over the previous two weeks, according to Lipper. Despite the latest inflows, the four-week rolling average remained negative, with a $1.15 billion outflow through Dec. 8, or the deepest level in the red for that moving average since the period to June 16, 2021.

Assets at the weekly reporters to Lipper totaled $277.3 billion, $78.9 billion of which is at exchange-traded funds, or 28%.

The inflows for the latest week came against the backdrop of risk-on tone early this week, as the fear level moderated regarding the potential fallout of the latest coronavirus variant. For that $277.3 billion pool of assets at the weekly reporters, the change in valuation due to market conditions was positive at $2.48 billion, reflecting the highest one-week gain since the week to Nov. 11, 2020, as positive vaccine developments stoked upbeat market sentiment in the wake of the Nov. 3 U.S. presidential election.

Also, the average bid for LCD's 15-bond sample of flow-name high-yield bonds increased 111 basis points for the week to Dec. 8, or the biggest jump in a single week since the period to Nov. 5, 2020.

The positive flows for the latest week reflected inflows of $222 million to mutual funds and $1.04 billion to U.S. high-yield ETFs. For mutual funds, it was the first net inflow in six weeks.

The inflows trimmed the net outflows for the year to date to $16.1 billion overall, including $15 billion exiting mutual funds and $1.1 billion leaving ETFs.