Investors withdrew $2.74 billion from U.S. junk-bond funds in the past week, the largest outflow since December, according to Lipper.
The third consecutive weekly withdrawal reduced net deposits for the year to $7.23 billion, Lipper data show. U.S. mutual funds and exchange-traded funds that buy leveraged loans saw $53.9 million of outflows, bringing year-to-date withdrawals to $5.15 billion.
Federal Reserve Chair Janet Yellen warned on Wednesday that both stocks and bonds are richly valued after more than six years of near-zero interest rates. Bond yields “could see a sharp jump” when the Fed raises its benchmark rate, she said.
U.S. junk bonds have returned about 3.6 percent this year, according to a Bank of America Merrill Lynch index. The debt is outperforming U.S. high-yield loan gains of 2.6 percent, according to the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index.