New York: High-yield, high-risk bond mutual funds experienced cash outflows for the second week, following a sell-off in junk-rated securities earlier this month.
Investors pulled $614 million (Dh2.3 billion) from the mutual funds for the week ended February 17, according to Cambridge, Massachusetts-based research firm EPFR Global. The previous week, the outflow totalled $1.12 billion, the biggest since the period ended August 30, 2006, when $1.26 billion of cash was withdrawn.
Cash flowed out of mutual funds invested in junk bonds as concern mounted that the contagion from rising European government deficits might spread to other assets. Investors may again seek out the funds as high-yield bonds rally, said Martin Fridson, CEO of money-management firm Fridson Investment Advisors in New York.
"It's basically reactive and it may take a little time" for mutual fund flows to catch up, Fridson said in a phone interview. "We're likely to get back on a positive track if there are no new shocks."
