“When you have had such volatile markets over the last few years, the value of that liquidity is higher for investors,” says Brad Rogoff, head of global credit strategy research at Barclays Capital. “You can get in and out [of ETFs]as quickly as you want.”
Trading volume has surged in junk bond ETFs as short-term investors have been attracted to them. Some critics warn that the higher trading activity may increase volatility. The junk bond ETF market is not nearly as large as the equity market, so chances of markets going askew is greater. [Popular High-Yield Bond ETFs Stumble]
However, Mr. Tucker of iShares stated that the ETF industry is simply too small to create that depth of market volatility. According to Tucker, ETFs account for about 3% of the U.S. high-yield market, just under $1 trillion.
Junk bond ETFs include:
- iShares iBoxx $High Yield Corporate Bond Fund (NYSEArca: HYG)
- SPDR Barclays Capital High Yield Bond (NYSEArca: JNK)
Tisha Guerrero contributed to this article.