An exchange traded fund indexed to U.S. corporate high-yield bonds saw trading volume surge Thursday but the spike likely reflected a large trade that was made the previous day, according to an analyst who tracks ETF trading and liquidity.
More than 22 million shares of SPDR Barclays Capital High Yield Bond ETF (NYSEArca: JNK) had traded hands in afternoon dealings Thursday. Over the past three months, JNK has averaged daily volume of about 4.8 million shares, so trading in the ETF was more than 400% of the usual pace. [ETFs Bring Liquidity to High-Yield Bonds]
Paul Weisbruch, head of ETF/options sales and trading at Street One Financial, said a trade of over 19 million shares hit the tape in Thursday’s premarket before the opening bell.
“That is a reflection that the trade itself likely was consummated yesterday,” Weisbruch said.
It appears a customer sold out of large position in JNK on Wednesday but the trade was reported to the marketplace today, he added.
The JNK trade happened at $39.41 a share, Weisbruch said, while the ETF traded in a range between $39.42 and $39.65 a share in Thursday’s regular session.
A spokeswoman for State Street Global Advisors, which manages JNK, didn’t immediately return a request for comment on Thursday’s volume spike.
JNK’s price was little-changed on the day at last check. The ETF has a dividend yield of 7.3%.
High-yield ETFs have been very popular this year with investors trying to boost income in a low-rate environment for bonds. [Waiting Out the Stock Market with High-Yield ETFs]
High-yield or “junk” bonds offer higher yields, but investors need to remember they’re being compensated for taking on more risk by moving into lower-quality debt. [High-Yield Bond ETFs Come with Risks]
ETF providers are also rolling products that invest in high-yield corporate bonds from emerging markets. [Why Emerging Market Corporate Bond ETFs are Hot]
SPDR Barclays Capital High Yield Bond ETF
