By Katy Burne
Investors yanked $2.75 billion from funds dedicated to low-rated
corporate debt, in the latest sign of nerves about economic
headwinds and turbulence in global bond markets.
The outflow was the largest weekly drawdown since $3.1 billion
flowed out of the funds in the week ended Dec. 17, said fund
tracker Lipper.
Exchange-traded funds bore a significant brunt of the outflows.
Some $585 million came out of State Street Corp.'s SPDR Barclays
High Yield Bond ETF, bearing the ticker symbol JNK, Lipper
said.
A full $1.6 billion came out of the BlackRock Inc.-owned iShares
iBoxx $ High Yield Corporate Bond ETF, which uses the ticker HYG,
Lipper said.
"The rout of European bonds caught investors by surprise," said
Jeff Tjornehoj, head of Lipper Americas research. Adding to the
unease, he said, was a disappointing jobs report this week, showing
private-sector payrolls expanded at a mediocre pace. "There seems
to be a few bumps in the road."
Junk-bond prices had been on a tear, leading some investors to
question how long the rally could last. Janet Yellen, head of the
U.S. Federal Reserve, was the latest voice to draw attention to
stock and junk-bond markets overheating in comments earlier this
week.
Now, investors appear to be taking a breather, worried that
market jitters may put a pause in their run-up. Total returns on
U.S. junk bonds, which account for price appreciation and interest
payments, are down 0.06% for the month to date, according to
Barclays PLC, but are up 3.69% for the year.
Write to Katy Burne at katy.burne@wsj.com
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