High-yield bond funds saw their sixth consecutive week on positive inflows for the week ended Aug. 12, data from Refinitiv Lipper showed, netting $1.5 billion for the week.

By the numbers: The six-week streak followed the fourth worst weekly net outflows on record dating back to 1992, showing sentiment on the riskier bond category has been soundly reversed.

  • High-yield or junk bond funds saw steep outflows in Q1 (-$14.2 billion) as investors reacted to COVID-19, but that was followed by record high quarterly net inflows in Q2 ($41.5 billion).
  • "Its net intake of $14.1 billion for Q3 to date has the potential to be its second-best quarterly result," Refinitiv Lipper senior research analyst Pat Keon said in a note.

Where it stands: "The performance from the high yield funds group has mirrored that of its fund flows activity for the year to date," Keon states.

  • After seeing significant losses and outflows, high-yield bonds have bounced back and are now down just 0.5% for the year.

Yes, but: While lower-rated high-yield bonds tend to be more correlated to stocks than other bond categories, high-yield has trailed the stock market's rebound this year.

  • In comparison to junk bonds' still-negative return for 2020, the S&P 500 has gained 4.4% year to date and the Nasdaq has risen 23%.

The intrigue: Refinitiv's data show most inflows to the category have come from mutual funds ($33.8 billion), while ETFs have contributed $21.8 billion to the total net positive flows.

  • Equity funds have seen negative fund flows so far this year.

Go deeper

Dion Rabouin, author of Markets
Sep 2, 2020 - Economy & Business

A credit upgrade cycle may be coming

Illustration: Aïda Amer/Axios

U.S. companies have taken on a historic amount of debt this year, with investment grade corporates already issuing a record $1.5 trillion in bonds, more than any full-year total ever. But many have also upped their holdings of cash, making net debt burdens far lower than expected, data from Bank of America Securities shows.

Why it matters: Lower indebtedness means companies will have stronger balance sheets and better ratings. That could mean not only do fewer companies default on debt than expected, but it "ultimately should lead to an upgrade cycle" in credit ratings, BofA analysts say.

2 mins ago - World

Xi's imperial dreams bring both benefits and risks

Illustration: Eniola Odetunde/Axios

By undertaking massive infrastructure projects around the world, China under President Xi Jinping is following in the footsteps of previous empires.

Why it matters: Like previous imperial projects in history, Xi's Belt and Road Initiative presents both benefits and risks for China.

TikTok rolls out in-app elections guide

Chesnot/Getty Images

TikTok said Tuesday that its debuting a new in-app elections guide to connect users with credible information about the elections from sources like the National Association of Secretaries of State, BallotReady, and SignVote.

Why it matters: The move comes amid scrutiny from the Trump Administration over whether the Chinese-owned app is a national security threat.