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Junk Loan Funds See $1.2 Billion in Withdrawals, Lipper Says

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June 13 (Bloomberg) -- Investors continued to pull money from U.S. leveraged loan funds this week, withdrawing $1.2 billion, the largest weekly outflow in almost three years, according to Lipper.

This is the eighth outflow in the past nine weeks, reducing net deposits this year to $2.5 billion, according to Lipper. A record $62.9 billion was deposited into the funds in 2013 as investors were drawn to the debt that promises a hedge from rising interest rates.

The withdrawals in the period ended June 11 were the largest since $2.1 billion the week ended Aug. 17, 2011, according to Lipper. Investors pulled money from bank loan funds “as the fear of imminent interest-rate increases faded,” Tom Roseen, a Lipper analyst, wrote in a report released yesterday.

Leveraged loans, a form of junk-grade corporate debt, have returned about 2.2 percent this year, down from 2.5 percent this time last year, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index. The debt typically has rates that rise and fall with benchmarks.

To contact the reporter on this story: Caroline Chen in New York at cchen509@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Faris Khan

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