With the markets off to a solid start in 2019, investors are starting to dip back into the high yield waters. In fact, they dove in with $3.28 billion in flows the past week.
This latest influx of capital follows $1.05 billion the previous week–signs that a risk-on sentiment is slowly creeping back into the markets, making the case for high-yield bond ETFs.
“There’s a decent bid for things that got beat up the most over the last month or two,” said Zachary Chavis, portfolio manager at Sage Advisory Services.
Names like the iShares iBoxx $ High Yield Corp Bond ETF (NYSEArca: HYG) and the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEArca: JNK) have been seeing more inflows the past week. According to data from XTF.com, fund flows within the past week topped $167.85 million for HYG, while JNK brought in $659.70 million–both taking two of the top 10 spots for fixed income fund flows the past week.
Other names like Xtrackers USD High Yield Corp Bond ETF (NYSEArca: HYLB) and PIMCO 0-5 Year High Yield Corp Bond ETF (NYSEArca: HYS) saw high inflows. HYLB saw $215 million on inflows and HYS saw just over $200 million.
One fund to consider is the Xtrackers High Beta High Yield Bond ETF (NYSEArca: HYUP), which seeks investment results that correspond generally to the performance, of the Solactive USD High Yield Corporates Total Market High Beta Index. The underlying index is designed to track the performance of the segment of the U.S. dollar denominated high yield corporate bond market that exhibits higher overall beta to the broader high yield corporate fixed income market.
“The high yield bond market has yet to show severe stress beyond some recent blips,” wrote Rob Isbitts of Forbes. “The market for Preferred stocks and Convertible securities. BBB-rated bonds have been teetering a bit, but these market segments have not completely broken down 2008-style.”
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