After a wild July that saw investors, primarily of the retail variety, flee high-yield bond exchange traded funds, junk is back in style with week ending Aug. 20 representing the best week of inflows to junk bond ETFs this year.
High-yield mutual funds and ETFs raked in $2.2 billion for the week ending Aug. 20, the second consecutive week of inflows after investors yanked $7.1 billion from such funds in the five days ending Aug. 6 and $12.6 billion over the prior four-week period, report Sridhar Natarajan and Christine Idzelis for Bloomberg, citing Lipper data.
Over the past five trading sessions, the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) and the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK), the two largest U.S. junk bond ETFs by assets, have added over $591 million in new assets. [Institutional Investors Return to Junk Bond ETFs]
The actively managed AdvisorShares Peritus High Yield ETF (NYSEArca: HYLD) has added almost $31.6 million.
The yield on Bank of America Merrill Lynch’s U.S. High Yield index, a benchmark covering a U.S. junk bonds, rose to 5.94% on August 1 from 4.85% on June 24 as investors dumped junk debt. However, increased demand “has pushed average yields down 40 basis points to 3.9 percent from a six-month high of 4.3 percent on Aug. 8,” according to Bloomberg.
HYG and JNK have 30-day SEC yields of 4.79% and 5.22%, respectively, compared to a 2.41% yield on 10-year U.S. Treasuries.