Abramowicz pointed out that the flows in and out of the largest junk bond ETF have been increasingly volatile, even though prices have not been relatively stable. Meanwhile, trading volumes in the fund have increased, and trading in the underlying debt market has not been particularly elevated either.

ETFs offer a convenient solution for dealers with clients redeeming debt securities. Unlike mutual funds, which sell securities for cash in cases of client redemptions, ETFs allow investors to exchange shares for baskets of underlying securities. However, the caveat is that someone would need to be comfortable with dealing in the large volume required to swap out baskets of securities.

Related: If Rates Rise, Look to These Junk Bond ETFs

However, as dealers rely more on ETFs, there is less reliance on sourcing individual buyers and sellers for bonds, which may mean that dealers won’t be as capable of handling a quickly deteriorating debt market. If a group of big investors suddenly made a run on high-yield debt and dealers use HYG to service the redemptions, the ETF shares could see value precipitously plunge and potentially fuel a spiral of panic sells.

For more information on the Junk Bonds sector, visit our Junk Bonds category.