ETF Chart of the Day: High-Yield, Junk Bonds | ETF Trends

We typically spend a lot of time discussing flows in and out of the two largest and well-known U.S. High Yield Corporate Bond ETFs, HYG (iShares High Yield Corporate Bond, Expense Ratio 0.50%) and JNK (SPDR High Yield Bond ETF, Expense Ratio 0.40%) as they tend to command the lion’s share of inflows and outflows as market sentiment changes, not to mention the two funds average 6.3 million and 7.5 million shares traded daily respectively.

Today however we speak about several other products in the category that have grown to prominence over the years.

SJNK (SPDR Barclays Short Term High Yield Bond, Expense Ratio, 0.40%), has raised about $83 million in new assets year to date, bringing its total asset base to about $4.2 billion ranking third in the category in terms of size.

After SJNK comes HYS (PIMCO 0-5 Year High Yield Corporate Bond, Expense Ratio 0.55%, $2.6 billion in AUM), PHB (PowerShares Fundamental High Yield Corporate Bond, Expense Ratio 0.50%, $678 million in AUM), SHYG (iShares 0-5 Year High Yield Corporate Bond, Expense Ratio 0.30%, $560 million in AUM), HYLS (First Trust High Yield Long/Short, Expense Ratio 1.29%, $480 million in AUM), and HYLD (Peritus High Yield, Expense Ratio 1.18%, $376 million in AUM) to name the largest funds in this category in terms of asset heft.

Average daily trading volume in these products takes a steep drop-off from say HYG and JNK, as SJNK for example averages about 1.3 million shares traded daily but on the opposite end of the spectrum, HYLD trades only approximately 76,000 shares traded daily.

As we have mentioned countless times in the past, average daily trading volume in terms of ETFs does not necessarily accurately reflect the true underlying liquidity of that given ETF, however in this category, because the underlying portfolios are made up of High Yield Corporate Bonds, liquidity can at times be challenging given market conditions and the nature of the dynamics of the High Yield Corporate Bond markets themselves.