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
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.