Even as retail investors shy away, Wall Street is still making a dash for trash.
In fact, the recent exodus of funds from high-yield bonds has only whetted the appetite of institutional investors, who are using the slump in junk prices as a buying opportunity, according to an analysis from the Wall Street Journal.
The mom-and-pop crowd ditched a net $13 billion in junk bonds for the four weeks preceding August 6, a trend that has pushed firms like Alliance Bernstein even deeper into the market.
“Investors who panic in these sell-offs—it’s the wrong thing to do,” Alliance’s Gershon Distenfeld told the Journal.
In response to the huge appetite, companies have sold $343.4 billion of high-yield into the market for 2014, a 10 percent increase from the previous year, and the fastest pace since Dealogic began keeping records in 1995.
Wall Street firms defend their interest in the space, saying solid corporate balance sheets and the Federal Reserve‘s intention to keep interest rates low for an extended period of time are making the risk of high-yield bonds well worth taking, considering they’ve returned 150 percent since 2008.