Junk bonds' strong rebound stimulates the junk bond fund sector, which brought in $1.1 billion in the week ended April 30, according to AMG Data Services. That marks the 10th week in a row of net inflows, Reuters reports. A declining default rate has helped junk bonds' rally since last October. Total inflows into the junk bond mutual fund sector this year has amounted to almost $14.7 billion.

Total returns on junk bonds, including interest and price gains, have reached 13.7% this year, according to Merrill Lynch. In comparison, Treasuries have gained 1.5%, investment-grade corporate bonds 4.6%, and the Dow Jones Industrial Average 1.4%.

According to AMG, investors redeemed a net $796 million in assets from U.S. stock funds in the same week, while they poured a net $330 million into municipal bond funds.

However, investment guru Warren Buffet warned investors that the time to buy into corporate junk bonds had passed.

At the Berkshire Hathaway annual meeting, Buffett said he has not increased his holding in junk-rated securities this year, after purchasing around $7 billion in the category last year.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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