ETF Trends
ETF Trends

High Yield Corporate Bonds have had a tough week and it has rippled through some of the largest ETFs in the segment. HYG (iShares iBoxx $ High Yield Corporate Bond, Expense Ratio 0.50%) has seen more than $700 million leave the fund via redemptions on heavier than average trading volume, with the fund clipping its 50 day MA on Wednesday and failing to recover since.

The fund is not alone in this, as the second largest fund in the space in terms of assets JNK (SPDR Barclays Capital High Yield Bond, Expense Ratio 0.40%) with $9.4 billion in AUM has lost nearly $200 million recently as well. PIMCO’s entry in this space, the fourth largest fund here in terms of assets, HYS (0-5 Year U.S. High Yield Corporate Bond, Expense Ratio 0.55%) also was pressured, seeing more than $500 million leave the fund yesterday.

More notably than perhaps redemption flows are the short term charts in all of these are under enormous pressure recently on large volume spikes, indicating that someone or multiple holders are heading for the exits, which is likely tied to global events and perhaps the recent jolt in volatility.

Even typically steady BKLN (PowerShares Senior Loan Portfolio, Expense Ratio 0.65%) which now has over $7 billion in AUM and the third largest fund categorized in the High Yield Corporate Bond space saw an uncharacteristically large intraday trading range yesterday and has recovered somewhat this morning.

SJNK (SPDR Barclays Capital Short Term High Yield Bond, Expense Ratio 0.40%), another prominent fund in the space traded a large multiple of its typical daily volume, and its largest volume day since May yesterday but
we have not seen redemption flows to note yet in this specific product.

HYLD (Peritus High Yield, Expense Ratio 1.25%), the only actively managed HY Corporate Bond ETF among the top six funds in the space in terms of assets under management, traded the most volume ever yesterday in the history of the product, nearly 1.5 million shares versus average daily volume of 271,000 shares.

We have not seen any accompanying create/redeem flows in the fund yet but we will watch closely because it is entirely possible that portfolio managers whom are in the HY Corp Bond space from an ETF model management standpoint, are re-shuffling holdings here where it makes sense and potentially even swapping from one HY Bond ETF into another in some cases.

AdvisorShares Peritus High Yield ETF

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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