Income-minded investors are increasingly turning to corporate credit and bond ETFs to generate more attractive yields in a stubbornly low yield environment.
Despite the record highs that U.S. equities are continuing to hit, fund investors have yanked more money out of stocks, funneling assets back into bond funds, reports Trevor Hunnicutt for Reuters.
U.S. based bond funds have attracted over $2 for every $1 gathered by equity funds this year, according to Thomson Reuters’ Lipper research. According to the Investment Company Institute data, bond funds saw $6.7 billion in inflows over the past week, adding a 40th straight week to their inflow streak.
Fueling the increased demand for debt assets, tumbling yields on safer government and corporate debt pushed investors towar riskier and higher yielding debt, like junk bonds. Furthermore, U.S. corporate bonds are enjoying a stronger tailwind in an environment of strong economic growth, healthy earnings and dropping default rates.