Assets of high-yield or junk bond mutual funds have risen roughly $1.5 billion since the beginning of the year. In the week ending Jan. 17 alone, assets rose $658.7 million and in the subsequent week, ending Jan. 17, they rose $834 million, according to AMG Data Services of Arcata, Calif., a mutual fund asset-tracking firm. Those increases are substantial considering the fall in assets in junk bond funds recently. Assets in the funds decreased by $10.94 billion from the beginning of the third quarter of 1999 to the end of the third quarter of 2000, according to AMG. That represents the largest drop in junk bond assets for any five-quarter period on record, according to AMG.
One of the main reasons for the turn around is the recent decrease in interest rates, according to analysts. The lower rates can help the financial position of companies, especially those that would issue more poorly-rated bonds, according to Avi Nachmany, director of research at Strategic Insight, a consulting firm in New York.