Junk Bond ETFs Receive Brunt of the Sell-Off

Growing anxious over the rising U.S. borrowing costs, fixed-income investors have been dumping speculative-grade or junk bond ETFs.

Over the past week, the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) and SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) were among the least popular ETF trades, experiencing $1.3 billion and $496 million in net outflows, respectively.

The losses from HYG were the biggest since October 2016, Bloomberg reports.

“The breaks higher in U.S. yields are rocking several parts of the market,” Dave Lutz, head of ETFs at JonesTrading Institutional Services, wrote in a note. “HYG is not a fan.”

Bond investors have been dumping their exposure to the more riskier segment of the fixed-income market as U.S. Treasury yields reached a level that triggered a global sell-off. Yields on benchmark 10-year Treasury notes are now hovering around 2.82%.