Junk bonds and speculative-grade debt-related ETFs started off on a solid footing in the new year as fixed-income traders grow more bullish on this riskier segment of the bond market.
So far in 2019, the iShares iBoxx $ High Yield Corp Bond ETF (NYSEArca: HYG) gained 3.5% and the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEArca: JNK) rose 3.7%.
Furthermore, investors have been piling into the junk bond segment, with HYG attracting $1.8 billion in net inflows and JNK bringing in $764 million in inflows over the past week, according to XTF data.
Market observers are growing more bullish on this debt category. Wells raised its high-yield total return forecast to 9.9%, compared to a 6% to 7% call last year, based on the attractive starting yield, fundamental backdrop and uptick in issuance as positive drivers, Bloomberg reports.