While ETFs represent 2% of the $1 trillion in U.S. corporate speculative-grade debt outstanding, they comprised over a third of the total $14.8 billion of inflows this year to mutual funds and ETFs that invest junk bonds, Bloomberg reported.
Defaults are low and in the last few months credit spreads have tightened as the economy appears to be improving, says Morningstar analyst Timothy Strauts.
“If you’re considering high-yield as a replacement for another fixed-income sector, exercise caution with new investments right now. The current economic situation is improving, but high-yield is trading at its long-term average credit spread. It is no longer the value it was six months ago,” he wrote in an analyst report on iShares iBoxx High Yield Corporate Bond.
iShares iBoxx High Yield Corporate Bond
