Market Overview

Not All Junk Bond ETFs Suffering Outflows

Not All Junk Bond ETFs Suffering Outflows

The iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: HYG), the largest ETF that tracks junk bonds, saw outflows of almost $219 million on Tuesday. Perhaps that is a sign that investors are taking profits in high-yield bonds and the corresponding ETFs, a scenario Benzinga reported was at play almost two months.

The five-largest junk bond ETFs have lost $1.97 billion in assets since September, according to Bloomberg. However, the focus on HYG and its rival, the SPDR Barclays High Yield Bond ETF (NYSE: JNK) underscores a familiar theme in the ETF universe.

That being the implication that only the largest funds tracking a particular asset class matter. With HYG and JNK, this is understandable given that the two ETFs combined for over $28.3 billion in assets under management at the start of trading Wednesday. Understandable, but not excusable. Not excusable because by focusing on HYG and JNK, missed is the fact that inflows to other junk bond ETFs have been impressive. This scenario was reported on in late September.

Nitpicking about $219 million departing from HYG, which had over $16.5 billion in AUM at the start of Wednesday's session, means glossing over a stellar run of asset gathering for the SPDR Barclays Short Term High Yield Bond ET (NYSE: SJNK). SJNK, JNK's short duration cousin, had $289 million in AUM on September 21. As of November 13, that number was $433.1 million, according to State Street data.

More impressive have been the AUM gains spotted at the Market Vectors International High Yield Bond ETF (NYSE: IHY). IHY, which debuted in early April, has easily crossed the much ballyhooed $100 million in AUM mark. In fact, IHY had $180.7 million in assets as of Tuesday. That means that since late September, IHY has grown its AUM total by nearly nine-fold.

When it comes to high-yield bond ETFs with prodigious asset-gathering talents, the PowerShares Senior Loan Portfolio (NYSE: BKLN) cannot be overlooked. BKLN's AUM chart, in words, would be explained like this: Less than $600 million in AUM in July to $927 million at the end of September. That $927 million turned to nearly $1.2 billion at the end of October. Today, the fund has $1.32 billion in AUM.

Clearly, the data support the fact assets have departed HYG. However, that does not mean assets are leaving all junk bond ETFs. The data say that just is not the case.

For more on junk bond ETFs, here.

Posted-In: Long Ideas News Bonds Short Ideas Dividends Dividends Specialty ETFs New ETFs Best of Benzinga


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