LONDON, Dec 1 (Reuters) - Outflows from junk bonds slowed to just $500 million, Bank of America Merrill Lynch (BAML) data showed on Friday, in a fifth week of redemptions from a sector where yields on some issues have fallen to record lows.
Investors have called time on the junk bond bull run in recent weeks, banking gains rather than loading up on more debt.
Last week investors pulled $2 billion from high yield bond funds, but this paled in comparison with the whopping $6.8 billion withdrawn in the week to Nov. 15 -- the sector's third largest outflows on record.
European high yield has returned 20 percent year to date, making it the best performing fixed income asset class according to BAML's league table of cross-asset winners and losers, but investor sentiment turned following the European Central Bank's tapering announcement on Oct. 26.
BAML's data, which runs from Wednesday to Wednesday, showed investors continued to favor investment grade corporate debt, shoveling in $5.6 billion and marking 49 straight weeks of inflows. The bank's analysts said higher spreads and redemptions would be necessary for a correction.
"Stock and credit sentiment (is) unambiguously bullish," BAML said.
Equities attracted $7.8 billion, with a rotation out of tech stocks and into financials after U.S. bank stocks rallied on a combination of deregulation hopes and progress on the U.S. tax cut bill.
Financial stocks attracted some $1.8 billion, their biggest inflows in 21 weeks, after Jerome Powell, nominated to replace Janet Yellen as chair of the U.S. Federal Reserve, defended the need to potentially lighten financial sector regulation.
At the same time, technology stocks suffered their first outflows in eight weeks, losing a modest $14 million, after attracting an historic $6 billion over the past six weeks.
The S&P 500's tech sector is up almost 37 percent year to date, but fell 2.5 percent on Nov. 29, its worst one-day performance since June.
By region, U.S. stocks attracted $4.3 billion, and emerging market equities $1.6 billion. The latter still lead BAML's overall league table of cross-asset winners and losers, up 35.3 percent year-to-date in dollar terms.
(Reporting by Claire Milhench; Editing by Catherine Evans)