Sell-Off Inflicts Technical Damage on Stock, High-Yield ETFs
November 21st 2011 at 12:39pm by John Spence
Monday’s stock-sell off on fears over Eurozone debt and the U.S. “supercommittee” failure drove S&P 500 exchange traded funds below their 50-day simple moving average. [Stock ETFs Fall]
However, recent market weakness has also pushed ETFs indexed to high-yield bonds and preferred stocks below this key technical indictor, a worrying sign for the bulls.
ETFs that invest in U.S. high-yield corporate debt or “junk” have been big sellers in 2011 as investors attempt to boost yield in bond portfolios. [High-Yield ETFs Rolling Over?]
The iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG) and SPDR Barclays Capital High Yield Bond (NYSEArca: JNK) both fell below their 50-day moving average on Monday, losing over 1%. The ETFs are yielding around 8%.
The iShares S&P U.S. Preferred Stock (NYSEArca: PFF) is another popular income-focused ETF that sports an attractive yield of nearly 7%. The fund has seen net inflows of about $1.6 billion year to date through October, according to the National Stock Exchange.
The preferred stock ETF has weakened in November, shedding about 2% over the past week. The fund dipped below its 50-day moving average on Monday. [BlackRock Lists International Preferred Stock ETF]
iShares iBoxx $ High Yield Corporate Bond Fund
iShares S&P U.S. Preferred Stock
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