Investment-Grade Bond Funds See Biggest Outflows Since 2020 Pandemic

US investment-grade corporate bond funds recorded $7.1 billion in net outflows last week — the largest weekly redemption since the 2020 pandemic. The selling accelerated on Monday, when funds bled $8.2 billion in a single day, marking the biggest daily outflow in over six years. For context, during the 2022 bear market, weekly outflows peaked at $6.5 billion.

The exodus comes as rising oil prices rekindled inflation concerns, while Alphabet's ($GOOGL) increased AI capex forecast intensified investor worries about surging capital spending. This backdrop has dampened appetite for corporate debt.

The investment-grade corporate bond ETF $LQD has fallen 2.8% since June 30, hitting its second-lowest level since September 2025. Year-to-date, the fund is down 1.4%.