Junk Bond ETF Sees Big Outflow
June 7th 2012 at 3:10pm by John Spence
An exchange traded fund that invests in high-yield corporate bonds saw its biggest one-day outflow of cash in its history, according to a report Thursday.
PHB holds assets of $885 million and was launched in November 2007. It is the third-largest high-yield ETF and is managed by Invesco PowerShares.
High-yield ETFs have been a popular option for income-seeking investors but the funds have experienced outflows and volatility lately on Europe’s debt crisis.
The recent flight to safety has pushed Treasury yields to record lows as investors seek out safe havens.
Earlier this week, the spread between junk bonds and Treasuries widened to 7.31 percentage points, the largest gap since the start of 2012, The Wall Street Journal reported. [High-Yield ETFs Hit Rough Patch]
This month, investors have redeemed 4 million shares from the $13.7 billion iShares iBoxx High Yield Corporate Bond Fund (NYSEArca: HYG) and 8.5 million shares from the $10.1 billion SPDR Barclays High Yield Bond ETF (NYSEArca: JNK), according to the Bloomberg report Thursday.
Last month, an investor redeemed $800 million worth of JNK shares in exchange for high-yield corporate bonds. [Fallout for High-Yield ETFs After Big Trade, Moody’s Warning]
PowerShares Fundamental High Yield Corporate Bond Portfolio
Full disclosure: Tom Lydon’s clients own HYG.
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