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Junk Bond ETFs Sink to Lowest Since 2016

Summit Street's Wallace Says ETFs May Be Too Easy to Trade

High-yield ETFs are...not heading higher.

Two exchange-traded funds that track junk bonds have fallen to their lowest levels since December 2016 as the rout in other risk assets persists.

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and SPDR Bloomberg Barclays High Yield Bond ETF (JNK) sank for a second straight day, as the turmoil in U.S. equities and Treasuries spoiled investors’ appetite for more perilous bets.

The declines coincide with a steep drop in inflows. Money had been pouring into HYG as recently as Monday, when it took in nearly $500 million, its biggest inflow since November 2016. On Wednesday, however, it took in less than $100 million. JNK, meanwhile, has seen 11 straight days of withdrawals.

The junk bond market has been on a bumpy ride for the last couple of weeks, with the Bloomberg Barclays U.S. Corporate High-Yield Total Return Index losing nearly 1 percent since Jan. 29. Prior to that, the gauge had risen more than 8 percent since the start of 2017 as investors piled into riskier assets with interest rates remaining low and stocks in a lengthy period of calm.

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