High-yield corporate bond ETFs are rebounding following their June swoon as some income investors think it’s safe to go back in the water.
Junk bonds are enjoying their biggest gain in about a year and a half, Bloomberg News reports.
The largest junk bond ETFs, iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) and SPDR Barclays High Yield Bond (NYSEArca: JNK), have seen hundreds of millions of inflows so far this month. [Investors Jumping Back Into Junk Bond ETFs]
“Yields became attractive enough that people started to come back into the market,” said Marc Gross, a money manager at RS Investments, in the Bloomberg story. “It’s been a pretty impressive rally.”
Junk bond yields are falling after spiking in June.
“We did view the sell-off as a buying opportunity,” said Eric Takaha, director of the corporate and high-yield group at Franklin Templeton Investments, in the article. “We were buyers particularly of high yield after the dip in some of our multi-sector fixed-income accounts.”
HYG, the high-yield ETF, has posted a total return of about 4% so far this year. The fund is paying a 30-day SEC yield of 5.55%.
iShares iBoxx High Yield Corporate Bond
Full disclosure: Tom Lydon’s clients own HYG and JNK.