American high-grade bond fund outflows are fastest since March

October 14, 2016

Demand for American-based bond funds demonstrated signs of waning for the last week, with market participants pulling cash from investment-grade corporate debt funds at the fastest pace since March. That’s what Lipper data unveiled on Friday.

Market participants, who have feasted on high-quality corporate debt in 2016, have become more wary of a probable interest rate lift by the Fed before year-end, which could drop bond values.

This year corporate bond prices have edged up, with the widely traded iShares iBoxx $ Investment Grade Corporate Bond ETF making more than 9% returns.

While recent withdrawals have been quite modest compared to the sturdy inflows earlier this year, the data disclosed high-grade bond funds returned up to $666 million in cash to investors during the seven days by October 12, the fastest pace of outflows for seven months.

So far this year, the funds have managed to grasp up to $90 billion.

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