European Junk ETF Posts Biggest Daily Inflow Since May

Europe’s largest high-yield exchange-traded fund posted its biggest inflow since May yesterday as investors return to credit markets after a selloff in the risky securities.

Investors placed 61.3 million euros ($81.3 million) in the iShares Euro High Yield Corporate Bond exchange-traded fund, which until yesterday had lost 330 million euros this month, according to data compiled by Bloomberg. The average yield on junk notes has dropped 36 basis points to 3.92 percent from a six-month high of 4.3 percent on Aug. 8, Bank of America Merrill Lynch data show.

After buying a record $116 billion of high-yield notes in Europe this year, bondholder confidence was hurt by escalating geopolitical conflicts in Ukraine and Gaza. The rise in yields attracted investors as loose monetary policies by central banks keep interest rates at all-time lows.

“High yield has bounced back,” said Allan Lane, London-based managing partner of fund manager Twenty20 Investments LLP, who has also worked in the ETF businesses of BlackRock Inc. and Barclays Plc. “This kind of inflow isn’t coming from retail investors. Institutional investors have noticed the extreme selloff, picked where they think is the bottom and come back in to get the yield, which is nowhere to be found.”

To contact the reporters on this story: Katie Linsell in Madrid at klinsell@bloomberg.net; Alastair Marsh in London at amarsh25@bloomberg.net

To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net Chapin Wright, Michael Shanahan

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