Ken Volpert, head of taxable bonds at Vanguard, in the story noted that junk debt ETFs can trade at premiums and discounts to net asset value, since high-yield bonds are relatively illiquid. [Look Before You Leap Into High-Yield Bond ETFs]
“Those swings hurt the average investor if they’re following the crowd,” Volpert said.
Indeed, high-yield bond ETFs can trade at premiums or discounts based on buying demand and selling pressure. [High-Yield Bond ETFs Trading at Discount After Pullback]
“There’s an opportunity to make money if you’re on the right side of the trade,” Volpert said in the report. “At this point, we think the average investor is better off in a mutual fund.”