"Investors have been seeking yield in the current low interest rate environment, and junk bond funds
have offered an alternative, but average investors do not expect to be cut off from trading in an open-end investment company registered under the '40 Act," Galvin said in a statement.
Fearing the Fed might raise rates faster than expected, investors pulled billions of dollars out of junk bond funds
In May, junk bond funds
took in $2.61 billion, and then the withdrawals began.
Riskier high-yield junk bond funds
, meanwhile, attracted $1 billion, according to the Bank of America Merrill Lynch report, which also cited data from fund-tracking firm EPFR Global.
The thinking here is similar to junk bond funds
, where the pitch was that individual risks of default, while real, could be mitigated by portfolio analysis when you brought enough different types of high-yield bonds together.
The new measures assign the scope of junk bond funds
and require stipulations and disclosures to be made in the investment contract and prospectus for junk bond funds
It helps that junk bond funds
have enjoyed an impressive run.
Ninety percent of the $6 billion that flowed into longer-term taxable bond funds last month went into junk bond funds
. Even Warren Buffett, the oracle of Omaha-based Berkshire Hathaway Inc., has acknowledged that he has been dabbling in the junk market, which is enjoying a strong rally.
If you want to live on the wild side, you can even invest in socially responsible junk bond funds
Junk bond funds
attracted huge amounts of investor capital in the 1980s.
For example, many high-yield junk bond funds
boosted returns in 1993 by investing in debt from developing countries like Argentina and Mexico.
Investors in those vehicles saw that surprisingly, for the second year running, junk bond funds
earned top honors hands down.