High Yield Corporate Bond Funds Have Been Seeing Record Inflows

As the coronavirus pandemic’s grip on the capital markets starts to lessen as the Federal Reserve looks to open its wallet for bond purchases, there’s been a marked increase in high yield corporate bond inflows as of late.

Per a Reuters report, investors sent “record inflows to high-yield corporate bonds and broke a six-week losing streak for investment-grade debt in the week that ended Wednesday as market volatility from the coronavirus crisis began to subside, according to Lipper data released Thursday. U.S. high-yield taxable corporate bond funds drew a record $7.66 billion in the week, while U.S. taxable bond funds took in $10.3 billion.”

High Yield Bond ETF Options

Investors looking to add high yield bond exposure to their ETF portfolios can look at the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Bloomberg Barclays High Yield Bond ETF (JNK). Some market experts question whether this move is nothing more than a small bandage on a gunshot wound.

Investors contemplating a high yield option can take a look at the Goldman Sachs Access High Yield Corporate Bond ETF (GHYB). GHYB seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Goldman Sachs High Yield Corporate Bond Index.

The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index. The index is a rules-based index that is designed to measure the performance of high yield corporate bonds denominated in U.S. dollars that meet certain liquidity and fundamental screening criteria.

Added Push into U.S. Stock Funds

With a renewed interest in high yield bonds hinting at an increased risk appetite for the markets, it’s feeding into strength for U.S. stock funds or vice versa. Mutual funds and ETFs alike experienced more inflows as fears of the coronavirus pandemic may be dissipating.

“The broad push back into financial markets was accompanied by slightly more than $8.8 billion in inflows into mutual and exchange-traded funds that hold U.S. stocks, extending a streak of inflows that began the week of April 1,” the Reuters report said further. “The moves came as the benchmark S&P 500 stock index continued to rally on the back of extraordinary intervention into the bond market by the Federal Reserve, a $2.3 stimulus plan passed by Congress, and signs that the rate of coronavirus infection in hot spots such as New York may be slowing.”

Investors looking at gaining equity exposure as more confidence rises in U.S. stocks again can look at the Goldman Sachs JUST U.S. Large Cap Equity ETF (JUST). JUST seeks to provide investment results that closely correspond to the JUST US Large Cap Diversified Index, which delivers exposure to equity securities of large capitalization U.S. issuers that engage in “just business behavior” based on rankings produced by the index provider.

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