We've heard repeatedly from Fed officials that there is no observable reach for yield, but mutual fund flow data paint a different picture. The latest stats (reflecting October data) released by the Investment Company Institute (ICI) show another month in which high yield bond funds (the red line) saw massive inflows and government bond funds (the dark blue line) saw massive outflows. The second chart just shows the three month sum of flows into the various types of bond funds and paints a similar picture. Basically, the individual investor is dumping risk free duration/interest rate risk for credit risk in a most obvious reach for yield.
In other fund flow news, we also note that aggressive growth equity funds saw the largest monthly inflow since January 2011.