Investors who have piled into high-yield ETFs indexed to corporate “junk” bonds may be in for a choppy ride if upbeat investor sentiment on the economy wanes.
The iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) and SPDR Barclays High Yield Bond (NYSEArca: JNK) are on a three-day losing streak. The junk bond ETFs are also heading for a test of the 50-day simple moving average for the first time this year. [Junk Bond ETFs Still Say Risk-On]
Some technical analysts watch high-yield ETFs as an indicator for how comfortable investors are with taking on risk. [High-Yield Bond ETFs See Record Inflow]
The junk bond funds are among the top ETF sellers in 2012 with income-hungry investors looking for more options outside low-yielding Treasuries and money market funds. [Investors See Best of Both Worlds in High-Yield ETFs]
“Since the beginning of the year, retail investors have sunk almost $12 billion into junk bond mutual funds,” ETF Guide reports.