Despite the recent outflows from high-yield ETFs, Gary Gordon in an article for the The Street argues the media is exaggerating the exodus from junk bond funds.
“I am not suggesting that diversified high-yield corporate bond ETFs are immune from panicky market behavior,” Gordon wrote. “Expect a genuine exodus to occur if fiscal cliff resolution hopes fade away.”
For the week ended Nov. 14, U.S.-domiciled high-yield mutual funds and ETFs saw outflows of $1.3 billion, HighYieldBond.com reports, citing EPFR Global data.
“That is the largest single negative reading in 24 weeks, and the third-largest single-week outflow in 2012,” according to the report. “However, more than half of this outflow – some $740 million – was ETF influenced. The outflow builds on last week’s $39 million outflow, which was actually mutual fund inflows against an $88 million ETF outflow.”
SPDR Barclays High Yield Bond
Full disclosure: Tom Lydon’s clients own JNK and HYG.