High-Yield ETFs Go Global
April 10th, 2012 at 2:00pm by Tom Lydon
BlackRock’s iShares has led the exchange traded fund industry and is now taking the lead in the global junk bond boom.
“There are many fixed-income managers today who are really reaching out to international and global issuers,” Darek Wojnar, head of product development and management for iShares, said in a recent report. “That’s one of the ways to diversify sources of yield.” [Are High Yield ETFs About to Get Junked?]
Fund managers are looking outside U.S. debt now for yields on junk bonds outside the country at almost double the average of the past decade, reports Lisa Abramowicz for Bloomberg. Investors have put around $31.1 billion into speculative-grade debt for the past 14 weeks, according to EPFR data. [Are High-Yield Bond ETFs Overbought?]
According to Bank of America Merrill Lynch data, high yield bonds sold overseas returned 10.4% in the first quarter, compared to 5.1% for dollar-denominated junk notes. Some of the latest replication funds include:
- iShares Global ex-USD High Yield Corporate Bond Fund (BATS: HYXU)
- iShares Emerging Markets High Yield Bond Fund (BATS: EMHY)
Both ETFs try and replicate indices that are made up of debt from developed and emerging markets besides besides the U.S. So far, the U.S. junk bond market is five times larger than the European market. [iShares Lists New High Yield ETFs]
These ETFs launched April 5 :
- iShares Global High Yield Corporate Bond Fund (BATS: GHYG)
- iShares Morningstar Multi-Asset Income Index Fund (BATS: IYLD)
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.