Exit Anxiety Seen as Mutual Funds Hog Corporates: Credit Markets

The biggest buyers of U.S. corporate bonds since the financial crisis may be the least likely to stick around when the Federal Reserve raises interest rates.

Mutual funds have purchased about half of the company bonds that have been added to the U.S. market since 2008, equivalent to about $1.5 trillion of assets, according to Morgan Stanley, the fifth-biggest underwriter of the debt globally last year. That’s helped expand their share of the debt to 16 percent from 13 percent five years ago and contrasts with a decline for buyers such as pension funds and life insurers that tend to hold onto the securities longer.