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U.S.-based high-yield bond funds attract $680 million, first inflows in 5 weeks

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[August 15, 2014]  By Sam Forgione

NEW YORK (Reuters) - Investors in U.S.-based funds committed $680 million in new cash to high-yield junk bond funds in the week ended Aug. 13 on reduced concerns of both excessive prices on the debt and an early Federal Reserve rate hike, data from Thomson Reuters' Lipper service showed on Thursday.

The inflows were the first in five weeks and came after investors pulled a record $7.1 billion out of the funds the prior week. Taxable bond funds overall attracted $3.8 billion after posting $4.8 billion in outflows the prior week.

"Much weaker data than expected around the globe added to the belief that none of the major central banks were going to withdraw stimulus," said Kim Rupert, managing director at Action Economics in San Francisco. She said investors moved back into high yield after recognizing the bonds as having been oversold.

One closely watched data point was Wednesday's U.S. retail sales figures, which showed a lack of growth in July from June. Economists polled by Reuters had projected a 0.2 percent increase.

Funds that hold floating-rate loans posted $687.1 million in outflows, marking their fifth straight week of withdrawals. The loans also offer higher yields, and funds that hold them typically attract cash alongside high-yield bond funds.

Emerging markets bond funds, meanwhile, attracted about $72 million in new cash after posting $761 million in withdrawals the prior week.

Stock funds attracted $1.3 billion in inflows after posting massive $16.4 billion withdrawals the prior week, which were the biggest outflows since February.

While stock exchange-traded funds attracted $1.4 billion in new cash, stock mutual funds posted $162 million in withdrawals. That marked their third straight week of outflows.

The reduced concerns of an earlier-than-expected rate hike from the Fed also helped inflows into stock funds recover, said Patrick Keon, research analyst at Lipper.

Funds that specialize in Japanese stocks, meanwhile, posted about $106 million in outflows, marking their first outflows in five weeks.

Investors still expressed some caution by committing $9.3 billion to low-risk money market funds, which are viewed as a place to park cash. That marked their second straight week of inflows.

The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.

(Reporting by Sam Forgione; Editing by Lisa Shumaker)

[ 2014 Thomson Reuters. All rights reserved.]

Copyright 2014 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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