Are Investors Ready To Forgive High Yield?

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Includes: ACP, AIF, ANGL, ARDC, CIF, CIK, CJNK, DHG, DHY, DSU, EAD, FHY, GGM, HHY, HIX, HYG, HYLD, HYLS, HYT, IVH, JNK, JQC, JSD, KIO, MCI, MHY, MPV, NHS, PCF, PHF, PHT, QLTC, SJB, UJB, VLT
by: Lipper Alpha Insight

By Tom Roseen

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It seems like forever since investors felt good enough about the high yield sector to create net inflows to either the mutual funds or ETFs that track it. However, despite continued softness in the junk bond market, fund outflows have improved since a recent low in December, and the latest flows week ended February 3 showed a scant $108 million in outflows from high yield mutual funds (the lightest since weekly outflows began their current streak in mid-November) and a $67 million inflow to high yield ETFs. Continued low oil prices are generally blamed for wider spreads in high yield, but growing opinions that the Fed is unlikely to raise rates much this year have led the dollar lower and provided some lift to oil prices in recent weeks. In turn, junk bond prices have gotten a boost, and lighter retail outflows may help close those spreads a bit more.