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SMALL INVESTORS WISELY CASH IN JUNK BONDS

 SMALL INVESTORS WISELY CASH IN JUNK BONDS
 /ADVANCE/ NEW YORK, May 3 /PRNewswire/ -- After pouring billions of


dollars into high-yield junk bond funds over the past 16 months, many smart small investors have begun selling to collect profits, according to Money magazine's Small Investor Index.
 Most analysts think investors are selling at exactly the right time. "Junk bond prices now fully reflect the improved economy," says Joseph Bencivenga, managing director of high-yield research at Salomon Bros. "Junk bonds therefore offer much less profit potential than they did a year ago."
 Individuals added $2.3 billion of fresh cash to junk bond funds in the first quarter of 1992, on top of $3.3 billion last year. The chief reason: The funds have been paying yields of around 11 percent, compared with 8 percent for Treasury bonds. In addition, so far this year, the prices of junk bonds have risen 7.5 percent as the economy has improved, while Treasuries have lost an average of 1.8 percent.
 Last month, however, the net flow of money into junk bond funds slowed dramatically, as small investors increasingly concluded that stock funds offer better profit opportunities. For instance, T. Rowe Price's $1.2 billion High Yield Fund, which pays 10 percent, brought in about $45 million a month from January through March -- but only $18 million in April.
 Several mutual fund groups actually reported net outflows from junk bond funds in April. The $1.8 billion Kemper High Yield Fund, for example, suffered net redemptions of $97 million in April -- more than it had attracted in the entire first quarter. Much of the money leaving the fund went to Kemper's growth-stock funds.
 Last week, the Small Investor Index rose $135 to $45,791. Stocks gained $118, while bonds added $6. CDs and money funds contributed $14 and gold lost $3.
 This Last Year % Change from a
 Week Week Ago Week Ago Year Ago
 101.81 101.51 93.37 +0.29% +9.05%
 Latest Changes for Each Asset
 % Change from a
 Category Index Week Ago Year Ago
 Stocks:
 NYSE 103.40 +0.86% +12.48%
 ASE/OTC 103.47 +0.46 +17.83
 Equity funds 103.27 +0.73 +12.22
 Bonds:
 Taxable bonds 100.05 +0.18 +10.00
 Municipals 100.90 -0.23 +8.17
 Bond funds 100.77 +0.11 +10.99
 Short-term assets:
 CDs 101.53 +0.08 +5.39
 Cash 101.34 +0.07 +4.58
 Other:
 Real estate 98.05 -0.01 -5.74
 Gold 89.71 -1.34 -6.13
 Dec. 27, 1991 equals 100
 Where Average Small Investors Have Their Money Now
 Current Year Ago Current Year Ago
 NYSE 22.07% 21.91% Bond funds 5.36% 4.37%
 ASE/OTC 6.97 6.92 CDs 16.20 19.44
 Equity funds 5.18 4.27 Cash 23.43 21.60
 Taxable bonds 12.65 13.13 Real estate 0.76 0.76
 Municipals 6.89 7.08 Gold 0.50 0.52
 Sources: Bank Rate Monitor, IBC/Donoghue's Money Fund Report, the Federal Reserve, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council.
 -0- 5/4/92
 /NOTE TO EDITORS: This material is also available in printable form from AP GraphicsNet and Access services for graphics and tables (under the file name MoneyIndex) and from PR Newswire for full text./
 /CONTACT: Jordan Goodman of MONEY, 212-522-3618, or Patti Straus of MONEY public relations, 212-522-2695/ CO: ST: IN: SU: ECO


GK -- NY056 -- 5548 05/01/92 14:55 EDT
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Date:May 1, 1992
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