The popular high-yield ETFs include significant exposure to lower quality speculative-grade debt that are at greater risk to default. For instance, JNK has a 13.8% tilt toward CCC or lower-rated debt and HYG has 8.8% in CCC-rated securities. [Bond ETF Outflows Picking Up]
“Fisher on CNBC Monday took issue with the notion that junk bond ETFs are not liquid. “We had 4.5 billion almost in volume just in BlackRock’s HYG high yield … on Friday.” That compares, he continued, to the cash market, which “on a normal day does 6 to 9 billion” in volume,” according to CNBC.
iShares iBoxx $ High Yield Corporate Bond ETF
Tom Lydon’s clients own shares of HYG and JNK.