After staging a decent rally this year, high-yield speculative-grade bond exchange traded funds are now experiencing large withdrawals.
Retail investors pulled $1.96 billion from U.S. high-yield funds for the week ended March 11, with 97% of the total, or $1.91 billion, from ETFs, writes Matthew Fuller of S&P Capital IQ on Forbes.
Over the week ended March 11, the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) experienced $1.5 billion in outflows and the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) saw $921.6 million in redemptions, according to ETF.com.
The large withdrawals and pullback in high-yield bonds may be in response to the sudden influx of $11 billion in speculative-grade debt to hit the market, the biggest sale of securities in almost a year and 26% ahead of last year’s supply, Bloomberg reports.
Over the past week, HYG dipped 0.8% and JNK fell 0.5%.
“The market is showing some indigestion,” John McClain, a money manager at Diamond Hill Capital Management Inc., said in the Bloomberg article. “It’s harder to find value with a lot of companies taking a ‘now or never’ approach to the market, pouring a lot of supply into the market.”