UPDATE 1-High-yield bond funds post 5th week of global outflows -BofA

Fri Aug 15, 2014 2:22pm EDT

(Adds investor quote and details on equity flows; byline)

By Sam Forgione

NEW YORK Aug 15 (Reuters) - Investors worldwide pulled $2.4 billion out of high-yield junk bond funds in the week ended Aug. 13, marking the fifth straight week of withdrawals and indicating increasing concern over risk assets, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The outflows from junk bond funds came after record withdrawals of $11.4 billion in the prior week and against the backdrop of investors moving into plain-vanilla securities including Treasuries.

In fact, bond funds overall attracted net inflows of $3.8 billion, marking their biggest inflows in six weeks, according to the report, which also cited data from fund-tracker EPFR Global. Of that, funds that mainly hold U.S. Treasuries attracted $2.2 billion in new cash, their sixth straight week of inflows.

Jeffrey Gundlach, who as co-founder and chief investment officer at DoubleLine helps oversee $52 billion in assets, said Treasuries were not only benefitting from flight-to-quality but also from supply and demand factors.

"One of the other reasons that interest rates have fallen in 2014 is because there aren't any bonds floating around, hardly," Gundlach said. "There really isn't that big of a float in bonds, particularly long-term bonds, because the Federal Reserve bought so many of the long-term bonds that there's a great fraction that are not really trading around in the world."

He was referring to the Fed's massive program of asset purchases, which will end in October if the economy stays on track.

Investors are still showing some appetite for equities.

Stock funds worldwide attracted $2.8 billion in new cash, but not after $16.3 billion in outflows in the prior week. Emerging markets equity funds worldwide had $1.9 billion of inflows, their 10th straight week of inflows, according to data from BofA.

That said, European stock funds posted $3.5 billion in outflows, marking their largest withdrawals since August 2011. Japanese stock funds attracted $1.8 billion, their biggest inflows in 17 weeks, while U.S.-focused stock funds attracted just $1.3 billion.

(Reporting by Sam Forgione; Editing by Chizu Nomiyama and Tom Brown)

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