Junk-Bond Fund Outflows Rise to $2.5 Billion, BofA Says

Investors pulled $2.5 billion from U.S. high-yield funds, the biggest weekly redemptions this year, according to Bank of America Corp.

The withdrawals followed $1.9 billion of outflows the previous week, according to a report from the Charlotte, North Carolina-based bank yesterday. Funds that purchase leveraged loans recorded outflows of $260 million, the report said.

“Corporate actions took a backseat to military operations this past week” for mutual-fund investors, Jeff Tjornehoj, an analyst at Denver-based research firm Lipper Inc., said in a statement yesterday.

The crisis in Ukraine escalated after a Malaysian Airlines passenger jet crashed, killing all the people on board last week. The government in Kiev blamed pro-Russian rebels for shooting down the plane, while the separatists deny the accusation. Israel sent troops into Gaza last week, and it has been bombarding it for more than two weeks in response to rocket attacks.

Junk bonds are poised to report their first monthly loss this year, having declined 0.4 percent in July, Bank of America Merrill Lynch index data show.

To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Mitchell Martin, Chapin Wright

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