The SPDR Barclays High Yield Bond ETF (ITE) and SPDR Barclays High Yield Bond ETF (JNK) have seen a large increase in short interest as investors are betting on falling prices in the future. As rates rise, the value of bonds inside a portfolio can decline to a certain degree and investors are selling high yields for less risky options.
Escalating trade tensions between the US and China have shepherded traders to ditch riskier market exposure and shift assets toward safer pastures with investments like U.S. Treasury bonds.
Although many investors have put money behind short-term debt assets as they are supposed to be less sensitive to interest rate fluctuations than vehicles with longer duration, some are opting for even more conservative investments because of their stability.
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SPDR Barclays High Yield Bonds Higher Risk
Against such a backdrop, companies like Envestment Asset Management are pulling their money out of high yield bonds. According to the company in its most recent filing with the SEC, Envestnet Asset Management Inc. decreased its holdings of ITE by 8.8% during the 4th quarter. Envestnet Asset Management Inc. owned approximately 0.08% of ITE worth $593,000.
This photo is sourced from Ledger Gazette.
A short interest is the quantity of stock shares that investors have sold short but not yet covered or closed out. Short interest is a market-sentiment indicator that tells whether investors think a stock’s price is likely to fall. It can also be compared over time to examine changes in investor sentiment.
According to the Ledger Gazette, JNK saw a large increase in short interest in March. “As of March 29th, there was short interest totaling 59,716,749 shares, an increase of 8.0% from the March 15th total of 55,311,046 shares. Based on an average daily volume of 11,745,648 shares, the short-interest ratio is presently 5.1 days.”
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Despite the safe haven bonds tend to be, ITE and JNK may be too risky in this political and economic climate for investors who are looking for more security.
For more information on the fixed-income market, visit our bond ETFs category.