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Global Rout Takes Hold of Junk-Bond and Emerging-Market Funds

  • Investors pull $3 billion from ETFs tracking risk appetite
  • Asset classes generated returns of more than 8% last year
Bloomberg business news
Jeffrey Schulze of ClearBridge Investments says the pullback has been "overdue for some time."(Source: Bloomberg)

Investors haunted by higher U.S. borrowing costs are paring exposure to two of the hottest fixed-income trades of 2017: emerging markets and high-yield debt.

The biggest exchange-traded funds that track the two asset classes posted about $3.1 billion of withdrawals last week as U.S. Treasury yields breached a level that spurred a global selloff. The losses from the junk fund (HYG) were the biggest since Oct. 2016, while those from developing-nation fund (EMB) were the biggest since July last year.