Junk bond funds experienced the second largest outflow this year for the week ending Wednesday, according to AMG Data Services of Arcata, Calif. The $622.2 million in outflows last week is the most since a $649.5 million outflow the week ending March 21.
Having a lot of volatility in junk bond funds is not unusual, due to the way institutional investors typically trade them, according to Avi Nachmany, director of research at Strategic Insight of New York.
Trading high yield bond funds is really a market timing activity, said Nachmany. Beyond just being driven by performance, junk bond funds are one of those categories that generally has very high volatility. Institutional investors trade it and its not so much a retail fund category. Its hard to trade individual junk bonds so institutions trade the junk bond funds and youll see a good deal of volatility with them.
Equity funds also had outflows last week totaling $2 billion, according to AMG. Roughly $1.1 billion of that came out of international equity funds. Money market funds experienced outflows of $11.7 billion last week.
While junk bond funds saw substantial outflows, all other taxable bond sectors had inflows for the week ending Wednesday, according to AMG. Total inflows, including the junk bond numbers, were $233 million.