High Yield ETFs in Spotlight as Treasury Yields Rise

While investors were turning their capital allocation down to the “low” setting in U.S. equities as the Dow Jones Industrial Average lost as much as 500 points on Monday, fixed-income investments were turned up to the “high” setting with an influx of capital into high-yield bond exchange-traded funds (ETFs).

With the October sell-offs in the rearview mirror for investors, it appears they’re ready to jump back into riskier, high-yielding ETFs like the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEArca: JNK) and iShares iBoxx $ High Yield Corp Bd ETF (NYSEArca: HYG). Last week saw a healthy influx of $7 billion into fixed-income ETFs in general.

“In fixed income, high yield names continued to see buyers. JNK and HYG both saw block buyers throughout the day,” said Brian Gilman, ETF Sales & Trading at Virtu Financial.

JNK seeks to provide investment results that correspond generally to the price and yield performance of the Bloomberg Barclays High Yield Very Liquid Index, which is designed to measure the performance of publicly issued U.S. dollar denominated high yield corporate bonds with above-average liquidity. HYG tracks the investment results of the Markit iBoxx® USD Liquid High Yield Index, which is comprised of high yield U.S. corporate bonds that have less than investment-grade quality.

Alternate High-Yield ETF Options

Fixed-income investors who are thirsty for high-yielding assets, particularly in the ETF space, can also explore other high-yield options, such as the ProShares High Yield—Interest Rate Hdgd (BATS: HYHG) and WisdomTree Interest Rt Hdg Hi Yld Bd ETF (NasdaqGM: HYZD)