After fleeing the funds in September and the first half of October, investors continue returning to exchange traded funds holding speculative-grade debt.
For the week ended Nov. 12, retail investors poured $890 million into high-yield bond funds, marking the fourth consecutive week of inflows, reports Matt Fuller for HighYieldBond.com.
Interestingly, the bulk of those inflows were not directed to ETFs. Junk bond ETFs captured just $93 million of that $890 million, according to HighYieldBond.com. That is a reversal from the year-earlier period when nearly all of the flows to high-yield bond funds went to ETFs. Still, the overall fourth-quarter inflows numbers for junk bond ETFs are strong.
For example, the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG), the largest junk bond ETF, has pulled in almost $1.7 billion this quarter, a total exceeded by just eight other ETFs. For the week ended Nov. 13, HYG added nearly $129 million in new assets. [Big Cash to Bond ETFs]
Investors have also warmed to short-duration high-yield offerings in the current quarter. For example, the SPDR Barclays Short Term High Yield Bond ETF (NYSEArca: SJNK) has added nearly $400 million in new assets this quarter.
SJNK is now home to over $4.3 billion in assets under management, over $1.4 billion of which has flowed into the fund just this year. The ETF, which is just two and a half years old, has gained a following among investors anticipating an interest rate hike from the Federal Reserve next year. By sacrificing some in the yield department, investors gain the advantage of SJNK’s modified adjusted duration of 2.34 years, which compares to almost 4.1 years on HYG. [Shorter is Better With Junk Bond ETFs]
“Total assets (for junk bond funds) are up $6.9 billion in the year to date, reflecting a gain of roughly 4% in 2014,” according to HighYieldBond.com.
SPDR Barclays Short Term High Yield Bond ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of HYG.