Investors with a willingness to take more of a risk in search of higher returns injected extremely high levels of cash into the U.S. junk bond market in the week ending June 4, Reuters reports. The inflow was at near-record levels.
According to AMG Data Services, U.S. based junk bonds pulled in $1.45 billion dollars in cash, the categorys third-largest-selling week.
Junk bond funds reached their highest inflow, $1.56 billion, in the week ending Aug. 28, 2002. The second-largest inflow was $1.54 billion for the week ending Feb. 28, according to AMG data.
This comes in stark contrast to much of last month, when deflation concerns drove investors into safer territories such as government debt. Between May 7 and May 21, junk bonds lost a net $877 million.
The so-called junk bonds have ratings below investment grade and carry higher yields as a result. The total returns on junk bonds now stand at 15.72%, which is much higher than other types of bonds this year according to Merrill Lynch. Treasuries are up 4.37% and investment-grade corporate bonds are up 8.03% year to date. However, at this point, some money managers are concerned that junk bonds are overvalued.