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Biggest Junk-Bond ETF Suffers Stampede With Credit-Market Freeze

  • Over $4 billion has exited high-yield funds so far this week
  • Delayed deals, widening spreads make ETF traders cautious
Pedestrians walk along Wall Street in front of the New York Stock Exchange.
Photographer: Michael Nagle/Bloomberg

The freeze gripping international credit has spread to exchange-traded funds that track junk bonds.

Investors have pulled over $4 billion from high-yield debt ETFs in the past week, after pouring about $13.4 billion into the funds in the last year, according to data compiled by Bloomberg. The biggest U.S. junk-bond fund -- BlackRock Inc.’s $15.2 iShares iBoxx High Yield Corporate Bond ETF, ticker HYG -- posted record outflows of nearly $1.6 billion on Tuesday.