Of concern to ETF investors is a rising liquidity issue in the high-yield credit market. Falling inventories have lead to increased times for sale and purchase of the bonds.
Even with dealers taking on more of the debt, the overall plunge in inventories has lengthened the time it takes to buy and sell bonds as demand outstrips supply, Bloomberg reported, citing Todd Youngberg, head of global high-yield fixed-income at Aviva Investors.
As it is, high-yield ETFs tend to be more volatile than the underlying broad market and are favorite tools of traders of looking to sell short as a hedging tool.
ETF Trends editorial team contributed to this report.
Full disclosure: Tom Lydon’s clients own HYG and JNK.