High-yield corporate bond exchange traded funds (ETFs) rallied along with the rest of the stock market off of the March lows. Can these funds continue to perform the way they have?

Last week, high-yield bond funds continued to see strong inflows, notching $162.3 million the week ending Wednesday. It was the third consecutive week of net inflows, reports The Wall Street Journal.

While high-yield bond ETFs rallied off the March low, they also managed to not follow the market south in June. Trang Ho for Investor’s Business Daily reports that the U.S. High Yield Index returned 3.18% for that month, in fact. In the first half of the year, it jumped a whopping 29.4%, the largest six-month return in its 23 years. The U.S. High Yield Index needs to gain just another 5% to return to June 2008 highs.

Investors generally seem to believe that corporate bonds will be a good bet for the second half of this year, says Deborah Levine for MarketWatch. Some might wonder after the run-up if it’s too late, but as long as the trend is there and corporate bonds are right for you, then it’s worth considering. Consult our trend following report for more on using the 200-day moving average as a guide.

  • iShares iBoxx $ High Yield Corporate Bond (HYG): up 10.5% year-to-date
  • SPDR Barclays High Yield Junk (JNK): up 16.5% year-to-date

For more stories about bonds, visit our bond category.

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.