SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) experienced redemptions of nearly $400 million on Monday but the corporate junk debt fund still holds $11.6 billion as investors scrounge for yield.
JNK saw outflows of $378 million on Monday, the second-highest daily redemption in the ETF’s history, according to Bloomberg.
“You’re going to see more of these block trades happening here because it’s replacing the credit-default swaps to some degree,” said Peter Tchir, founder of New York-based TF Market Advisors, in the report. “People are starting to use it as a way to short blocks of ETFs and then do the exchange.”
Junk bond ETFs have been very popular in recent years with investors stretching for yield as the Federal Reserve holds short-term rates near zero. [Junk Bond ETF Yields May Fall Below 5% Amid Scramble for Income]
That demand has pushed debt prices higher and yields on some junk bond ETFs below 5% for the first time. For example, iShares iBoxx High Yield Corporate Bond Fund (NYSEArca: HYG) has a 30-day SEC yield of 4.88%. The ETF holds $15.5 billion in assets.
“The five biggest ETFs that focus on speculative- grade debt have amassed more than $30 billion in the six years since the first such fund was created,” Bloomberg reports.