U.S. interest rates have been low for several years, which has increasingly stoked speculation of a high-yield bond ETF bubble with naysayers alleging that too many yield-chasing investors have piled into junk bond funds, including HYG and JNK.
While it is true that with $12.6 billion and $9.4 billion in assets under management, respectively, neither HYG nor JNK can be considered “small,” that combined $22 billion pales in comparison to the amount of cash Americans have socked away in low-yielding assets.
Data “show the American people have $10.8 trillion parked in cash, bank accounts and money-market funds that pay little or no interest. At the end of the first quarter, low-yielding assets totaled 84.5% of annual disposable personal income, the highest share in 23 years,” reports Rex Nutting for MarketWatch.
iShares iBoxx $ High Yield Corporate Bond ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of HYG, JNK, and HYLD.