Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. fund investors signal concern on credit

Stock MarketsNov 23, 2018 08:00PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. fund investors signal concern on credit

By Trevor Hunnicutt

NEW YORK (Reuters) - U.S. fund investors renewed their concerns about credit quality in corporate debt markets during the latest week, hitting leveraged loan and high-yield debt funds with multibillion-dollar withdrawals, Lipper data showed on Friday.

So-called "loan participation funds," made up of funds that buy loans to highly indebted companies that typically must pay investors more as interest rates rise, posted $1.7 billion in withdrawals during the week ended Nov. 21. That was the most cash pulled from those funds since December 2015, the research service's data showed.

High-yield "junk" bond funds based in the United States recorded $2.2 billion in withdrawals, the most in four weeks. Those funds include bonds from issuers with lower credit ratings.

Sentiment around corporate credit has turned more negative in recent weeks on concerns that economic and profit growth is starting to peak as rising interest rates from the Federal Reserve put more pressure on debtors.

The market includes a high number of issuers in the energy industry, which adds to the pressure on high-yield debt. Benchmark international Brent crude oil prices (LCOc1) are about $59 a barrel, down more than 30 percent from highs above $86 just last month.

The $14 billion iShares iBoxx $ High Yield Corporate Bond ETF (P:HYG), one widely traded junk bond fund, has nearly 15 percent of its holdings in the energy sector.

In further signs of the risk-aversion, investors pulled $1.4 billion from technology sector stock funds in the week, the most since February 2015. Tech funds have been the stars in the U.S. equity market's near-10-year run but have been bludgeoned by the change in sentiment and dour headlines, including Apple Inc's (O:AAPL) earlier this month putting out a lower-than-expected sales forecast for the Christmas quarter that jolted parts suppliers across the world.

Short-term U.S. Treasury funds gathered $2.6 billion, the most since January 2016. The funds have low credit risk because the issuer is the government and less sensitivity to rates because they repay over a shorter time frame, allowing investors to reinvest the proceeds at higher rates.

One area in funds does reflect an appetite for greater risk-taking among investors. U.S.-based funds invested in emerging market equities, such as those in China, pulled in $1.4 billion during the week, the most cash since March. Helping those stocks is a slowdown in gains for the U.S. dollar, whose rise this year put pressure on countries with greenback-denominated debts.

U.S. fund investors signal concern on credit
 

Related Articles

Asia lags as U.S., Euro stock futures rally
Asia lags as U.S., Euro stock futures rally By Reuters - Dec 05, 2021 9

By Wayne Cole SYDNEY (Reuters) - Asian share markets lagged a bounce in U.S. and European futures on Monday, while bonds surrendered some of their recent gains and oil rallied as...

Asian Stocks Mixed, Caution Reigns Over Omicron
Asian Stocks Mixed, Caution Reigns Over Omicron By Investing.com - Dec 05, 2021

By Gina Lee Investing.com – Asia Pacific stocks were mixed on Monday morning, as uncertainties about the omicron COVID-19 variant continue and investors await U.S. inflation data...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email