Over the past week, investors have moving back into junk bond ETFs. For instance, the PowerShares Fundamental High Yield Corporate Bond ETF (NYSEArca: PHB), which has a 4.4% 30-day SEC yield, has attracted $3.8 million in assets over the past week, whereas it has experienced $59.1 million in outflows over the past 30 days, according to PowerShares data. [Fixed-Income Traders Increasingly Rely on Junk Bond ETFs]
Rising yields may also signal risk in the speculative-grade debt market. However, default rates remain depressed. According to Moody’s Investors Service, the U.S. speculative-grade default rate diminished to 1.7% in September, compared to 1.9% in August and 2.8% in September 2013. The default rate is expected to average 2.1% over the fourth quarter and 2.4% over the first half of 2015.
iShares iBoxx $ High Yield Corporate Bond ETF
For more information on the speculative-grade bond market, visit our junk bonds category.
Max Chen contributed to this article.