US high-yield funds attract $1.46B to lift 4-week average to two-year high

U.S. high-yield retail funds posted inflows of $1.46 billion for the week to Aug. 17, marking a fourth straight weekly inflow, and establishing the longest uninterrupted run in positive territory since the summer of 2020, per data from Lipper.

The latest inflow built on positive readings at $27 million last week, $2.93 billion for the week to Aug. 3, and $4.83 billion for the week ended July 27. The four-week moving average increased to $2.31 billion, from $1.73 billion a week earlier, marking a high for that metric since the four weeks to Aug. 12, 2020.

The positive flows have reduced the 2022 net outflow to $26.1 billion, which is still double the $13.03 billion outflow for all 2021. It compares with a $38.3 billion inflow in 2020.

The latest positive reading reflected flows of $60 million into mutual funds, and $1.4 billion into US high-yield ETFs. Those inflows trimmed the year-to-date net outflows from the categories to negative $15.64 billion and negative $10.42 billion, respectively.

The value of the assets at the weekly reporters to Lipper increased for a seventh straight week, to $239.9 billion at Aug. 17, from a 2022 low at $217.8 billion on June 29. Values are down from $282.4 billion at the final reading of 2021.

The level of inflows over the weekly more than offset a hit to those asset values from market-based losses. The change due to market conditions was negative $668 million for the week, or the first reading in the red for that metric since the last week of June. The year-to-date net change due to market conditions is negative $20.5 billion, which compares with $14.3 billion of market-based gains for all 2021.

For reference, the the average bid for LCD's 15-bond sample of liquid high-yield issues declined 164 bps for the week to Aug. 18, to 90.13% of par, snapping a four-week string of consecutive gains. That trailing four-week upswing in prices had left the bid average at a 15-week high at 91.77 on Aug. 11. The latest level remains above the 86.28 level on July 14, and the multi-year low at 84.97 June 30. It is down from 96.53 on March 31, and 103.92 on Dec. 30, 2021.