“Uncertainty breeds volatility,” said Kevin Quigg, the global head of strategy and consulting at State Street’s ETF group, in a Bloomberg story earlier this year. “The volatility that’s being expressed in the marketplace is much more reflective of what’s going on in the broader marketplace.”
ETFs aren’t responsible for the price swings but have made the market more transparent, said Matt Tucker, the head of iShares Fixed Income Strategy at BlackRock.
The iShares ETF “has made the high-yield market visible for the first time for investors,” Tucker told Bloomberg. “They hadn’t realized that the high-yield market was that volatile. It was always that volatile; it just wasn’t that easy to see.”
The largest high-yield bond ETFs include:
- iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG)
- SPDR Barclays Capital High Yield Bond ETF (NYSEArca: JNK)
- PowerShares High Yield Corporate Bond Portfolio (NYSEArca: PHB)
- PIMCO 0-5 Year US High Yield Corporate Bond Index Fund (NYSEArca: HYS)
Full disclosure: Tom Lydon’s clients own HYG and JNK.