SPDR Bloomberg High Yield Bond ETF (ARCA: JNK)

SPDR Bloomberg High Yield Bond ETF (ARCA:JNK), Quote.Headers.trade-ideas

SPDR Bloomberg High Yield Bond ETF

SPDR Bloomberg Barclays High Yield Bond ETF

The fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index and in securities that the Adviser determines have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the index. The index is designed to measure the performance of publicly issued U.S. dollar denominated high yield corporate bonds with above-average liquidity.

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Inflation data supports Fed rate cuts, yields test crucial 200-day average, creating favorable bond market trend. Powell downplays hike concerns.

Disinflation Hopes Reshape Treasury Yields&#39; Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts

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As 2023 concludes, the bond market has witnessed a remarkable rally, bolstered by the strength of the U.S. economy and a reduction in inflationary pressures.

Investor Optimism Tested: Navigating 2024 Bond Market&#39;s Uncertain Terrain

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Investors are looking to riskier bond ETFs in anticipation of a U-turn in Fed&#39;s monetary policy.

Investors Pour Billions To Aggressive Bond ETFs, Banking On Multiple Fed Rate Cuts in 2024

A major trend shift is unfolding in the bond market, as key Treasury yields are currently testing the support of the crucial 200-day moving average, following the release of benign economic data that has cemented investor bets on <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">Federal Reserve rate cuts.</a>
Last month, the inflation rate calculated using the consumer price index (CPI) came in at 3.4% compared to the same month last year, down from 3.5% in March, and in line with the forecasted 3.4% increase. The &#8220;core&#8221; inflation rate, which excludes volatile energy and food prices, also matched estimates, falling from 3.8% to 3.6%.
April's inflation reading has raised hopes that the disinflation trend may restart after three consecutive higher-than-predicted CPI readings in the first quarter. 
In his recent comments, Federal Reserve Chair Jerome Powell downplayed concerns about a possible hike in interest rates, signaling that the next adjustment would likely be a reduction. However, he emphasized this cut might come later than the markets initially anticipated.
Money markets are currently factoring in a 50 basis point reduction in interest rates by the end of the year, with a 70% chance for the Federal Reserve to begin its loosening cycle in September.
<h1 class="wp-block-heading">Treasury Yields Eye 200-Day Moving Average Support</h1>
The yield on the benchmark 10-year Treasury note traded at around 3.36% on Thursday, hitting an intraday low of 3.31%, temporarily sliding below the 200-day average positioned at 3.33%. 
Similarly, yields on both 2-year and 30-year Treasury notes are currently testing the support of the 200-day average.
The 200-day moving average is a widely watched technical indicator that helps investors gauge the long-term trend of a security or index. 
When Treasury yields fall below this level, it often signals a bearish or downward trend, suggesting that investors are seeking safer assets amid expectations of a slowing economy or lower interest rates. This shift can create a more favorable environment for bond prices, which move inversely to yields.
Here&#8217;s a snapshot of the current yield levels compared to their 200-day moving averages, as well as their 2024 high-to-low range. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Maturity</th>
<th>Current Yield</th>
<th>200-day Moving Average</th>
<th>2024 Peak</th>
<th>2024 Low</th>
</tr>
</thead>
<tbody>
<tr>
<td>2 year</td>
<td>4.78%</td>
<td>4.75%</td>
<td>5.05%</td>
<td>4.12%</td>
</tr>
<tr>
<td>5 year</td>
<td>4.39%</td>
<td>4.35%</td>
<td>4.75%</td>
<td>3.75%</td>
</tr>
<tr>
<td>10 year</td>
<td>4.36%</td>
<td>4.33%</td>
<td>4.74%</td>
<td>3.82%</td>
</tr>
<tr>
<td>30 year</td>
<td>4.50%</td>
<td>4.48%</td>
<td>4.85%</td>
<td>4.07%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated as of May 16, 2024 (11:45 a.m. EDT) </figcaption></figure>
<h1 class="wp-block-heading">Chart: Inflation Data Casts Doubt On 10-Year Treasury Yield&#8217;s 2024 Rising Trend</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png" alt="" class="wp-image-341796" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38873168/us-inflation-data-prematurely-released-by-accident-yet-traders-missed-golden-oppo">US Inflation Data Prematurely Released By Accident, Yet Traders Missed Golden Opportunity</a>
<h1 class="wp-block-heading">Bond ETFs Set To Rally</h1>
The shift in Treasury yields has set the stage for a rally in bond ETFs, especially those focused on long-duration bonds. 
Here are five bond ETFs poised to benefit from rising expectations of Fed rate cuts:
<ol>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): This ETF tracks long-term U.S. Treasury bonds and is particularly sensitive to changes in interest rates. With long-dated yields falling, TLT could see sharp gains as it moves inversely to yields. In reaction to April&#8217;s inflation data, it rose 1.4% on the day.</li>
<li>Vanguard Total Bond Market Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): A broader option, BND includes a mix of short-, medium-, and long-term bonds. Its diversified approach makes it a stable choice as market sentiments shift. Following the latest inflation statistics, BND inched 0.6% higher.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): As rate cut expectations strengthen, investment-grade corporate bonds could see price increases. LQD offers exposure to this segment.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): Higher risk and higher reward, JNK covers the high-yield, or &#8220;junk,&#8221; bond market. Rate cuts often boost these bonds as investors hunt for yield.</li>
<li>iShares J.P. Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>): As Treasury yields retreat and the Fed hints at a slower pace for rate hikes, emerging markets bonds could benefit from increased investor appetite for higher-yielding assets. Notably, EMB rose 1.1% on Wednesday, positively reacting to inflation data. </li>
</ol>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38850154/economists-react-to-inflation-retail-sales-the-soft-landing-narrative-is-still-a-po">Economists React To Inflation, Retail Sales: &#8216;The Soft Landing Narrative Is Still A Possibility But Not A Guarantee&#8217;</a>
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Disinflation Hopes Reshape Treasury Yields' Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts

In recent weeks, several bond exchange-traded funds (ETFs) have experienced a significant surge in inflows, indicating a <a href="https://www.benzinga.com/money/best-bond-etf">heightened interest among investors. </a>
This shift coincided with a market that significantly upped bets on Federal Reserve rate cuts for 2024, backed by a robust and ongoing <a href="https://www.benzinga.com/topic/inflation">disinflationary trend</a> in the U.S. economy. 
Speculators have gone as far as factoring in an initial rate cut as early as March 2024, with whispers of a total of five rate cuts by December 2024.
But which bond ETFs are currently piquing investors&#8217; interest?
<h2 class="wp-block-heading">From &#8216;Cash-Like&#8217; to &#8216;Equity-Like&#8217;</h2>
While the third quarter in 2023 witnessed a notable uptick in inflows into cash-linked bond ETFs, primarily those investing in short-dated Treasury bonds and bills, the latest trends are veering towards more aggressive fixed-income strategies.
Investors are strategically positioning themselves in anticipation of an imminent U-turn in Fed&#8217;s monetary policy stance, eyeing a select group of bond ETFs that have weathered the storm during the recent spate of interest rate hikes.
Their bullish stance on riskier bond ETFs underscores a burgeoning belief that the bond market landscape could undergo a substantial recalibration in the coming months, as they brace for a more accommodating monetary policy environment.
These ETFs encompass a diverse range, including long-term Treasury bonds, emerging-market bonds, and high-yield corporate bonds. 
<h2 class="wp-block-heading">Top 10 Bond ETFs by Fund Inflows in the Past Month</h2>
<figure class="wp-block-table"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Fund Flows (1-month)</th>
</tr>
</thead>
<tbody>
<tr>
<td>iShares Trust &#8211; iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>)</td>
<td>$3.69 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>)</td>
<td>$2.62 bn</td>
</tr>
<tr>
<td>SPDR Series Trust &#8211; SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>)</td>
<td>$1.99 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>)</td>
<td>$1.89 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>)</td>
<td>$1.62 bn</td>
</tr>
<tr>
<td>Vanguard Bond Index Funds &#8211; Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>)</td>
<td>$1.56 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Broad USD High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USHY#NYSE">USHY</a>)</td>
<td>$1.31 bn</td>
</tr>
<tr>
<td>Vanguard Scottsdale Funds &#8211; Vanguard Long-Term Treasury ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGLT#NASDAQ">VGLT</a>)</td>
<td>$665.99 bn</td>
</tr>
<tr>
<td>Vanguard Charlotte Funds &#8211; Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>)</td>
<td>$641.06 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 5-10 Year Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IGIB#NYSE">IGIB</a>)</td>
<td>$216.67 bn</td>
</tr>
</tbody>
</table>
</figure>
Read Now: <a href="https://www.benzinga.com/etfs/specialty-etfs/23/12/36075348/golds-record-high-why-havent-gold-miners-followed-suit">Gold&#8217;s Record High: Why Haven&#8217;t Gold Miners Followed Suit?</a>
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We performed a screening of medium-cap ETFs &#8211; defined as having Assets Under Management (AUM) between $2 billion and $10 billion &#8211; to determine what funds had the largest change in net assets on the week, according to data from <a href="http://etfdb.com">etfdb.com</a>. Only non-leveraged funds were considered.&nbsp;
<h2 class="wp-block-heading">Winners</h2>
iShares MSCI USA ESG Select ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SUSA#NYSE">SUSA</a>)
SPTS added $529.80 million in net assets over the trailing week.
The iShares MSCI USA ESG Select ETF offers exposure to a wide breadth of companies with high Environmental, Social, and Governance (ESG) ratings.
SUSA has $4.52 billion in AUM and an expense ratio of 0.25%. The fund has holdings in 185 companies, with the 10 largest comprising 26.12% of the fund.
The fund's largest holdings are Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) and Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) making up 5.22% and 5.22% of the fund, respectively
SUSA has added $952.00 million in net assets YTD.
SPDR Portfolio Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPAB#NYSE">SPAB</a>)
SPAB added $266.40 million in net assets over the trailing week.
The SPDR Portfolio Aggregate Bond ETF offers exposure to an average of the US investment-grade bond market.&nbsp;
SPAB has $6.71 billion in AUM and an expense ratio of 0.03%.
SPAB added $524.06 million in net assets, YTD.
<h2 class="wp-block-heading">Losers</h2>
Xtrackers USD High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYLB#NYSE">HYLB</a>)
HYLB lost $453.47 million in AUM on the week.
The Xtrackers USD High Yield Corporate Bond ETF offers exposure to so-called corporate junk bonds. These offer increased yields in exchange for the added risk.
HYLB has $3.22 billion in AUM and an expense ratio of 0.15%.&nbsp;
YTD, HYLB has lost $1.04 billion in AUM.
SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>)
JNK lost $448.86 million in AUM on the week.
The SPDR Bloomberg High Yield Bond ETF offers exposure to corporate junk bonds, like HYLB. These are middle-rated bonds with a minimum of one year to maturity.
JNK has $6.01 billion in AUM and an expense ratio of 0.40%.&nbsp;
YTD, JNK has lost $3.41 billion in AUM.
Featured photo by<a href="https://unsplash.com/@johnonolan?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash"> John O&#8217;Nolan</a> on<a href="https://unsplash.com/photos/uMWPrcRsrto?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash"> Unsplash</a>

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SUSA

ESG-Focused Fund SUSA Continues To Grow, Topping The Chart Two Weeks In A Row, Risky Bonds Fall - ETF Winners And Losers: Mid-Cap Flows

We performed a screening of medium-cap ETFs &#8211; defined as having Assets Under Management (AUM) between $2 billion and $10 billion &#8211; to determine what funds had the largest change in net assets on the week, according to data from <a href="http://etfdb.com">etfdb.com</a>. Only non-leveraged funds were considered.&nbsp;
<h2 class="wp-block-heading">Winners</h2>
iShares MSCI USA ESG Select ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SUSA#NYSE">SUSA</a>)
SPTS added $632.37 million in net assets over the trailing week.
The iShares MSCI USA ESG Select ETF offers exposure to a wide breadth of companies with high Environmental, Social, and Governance (ESG) ratings.
SUSA has $4.52 billion in AUM and an expense ratio of 0.25%. The fund has holdings in 185 companies, with the 10 largest comprising 26.12% of the fund.
The fund's largest holdings are Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) and Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) making up 5.22% and 5.17% of the fund, respectively
SUSA has added $952.00 million in net assets YTD.
Materials Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLB#NYSE">XLB</a>)
XLB added $325.29 million in net assets over the trailing week.
The Materials Select Sector SPDR Fund offers exposure to the US materials sector. This is often a small portion of larger broad-based US market ETFs, but a sector with large potential upside and an attractive option for those looking to indirectly access commodity markets.
XLB has $5.40 billion in AUM and an expense ratio of 0.10%. The fund has holdings in 31 companies, with the 10 largest comprising 65.65% of the fund.
The fund's largest holdings are Linde plc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LIN#NASDAQ">LIN</a>) and Air Products and Chemicals, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/APD#NYSE">APD</a>) making up 20.88% and 7.22% of the fund, respectively.
XLB has lost $134.09 million in net assets YTD.
<h2 class="wp-block-heading">Losers</h2>
SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>)
JNK lost $941.88 million in AUM on the week.
The SPDR Bloomberg High Yield Bond ETF offers exposure to so-called corporate junk bonds. These are middle-rated bonds with a minimum of one year to maturity.
JNK has $6.01 billion in AUM and an expense ratio of 0.40%.&nbsp;
YTD, JNK has lost $2.94 billion in AUM.
SPDR Bloomberg Short Term High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SJNK#NYSE">SJNK</a>)
SJNK lost $375.90 million in AUM on the week.
The SPDR Bloomberg High Yield Bond ETF is very similar to JNK, however, the bonds held by SJNK are dated on a shorter term.
SJNK has $3.35 billion in AUM and an expense ratio of 0.4%. The fund has holdings in 32 companies, with the 10 largest comprising 60.30% of the fund.
YTD, SJNK gained $28.10 million in AUM.Featured photo by<a href="https://unsplash.com/@ehmitrich?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash"> Антон Дмитриев</a> on<a href="https://unsplash.com/photos/WcG7DOyrSoM?utm_content=creditCopyText&amp;utm_medium=referral&amp;utm_source=unsplash"> Unsplash</a>

SJNK

Amidst Global Conflict, Investors Flood ESG-Focused Fund - ETF Winners And Losers: Mid-Cap Flows

We performed a screening of mid-cap ETFs - defined as having Assets Under Management (AUM) between $2 billion and $10 billion - to determine what funds had the largest change in net assets on the week, according to data from <a href="http://etfdb.com">etfdb.com</a>. Only non-leveraged funds were considered.&nbsp;
<h2>Winners</h2>
Goldman Sachs Access Treasury 0-1 Year ETF (NYSEARCA: GBIL)
GBIL added $386.54 million in AUM on the week.
The Goldman Sachs Access Treasury 0-1 Year ETF focuses on the most liquid treasury securities maturing in under one year.
GBIL has $5.88 billion in AUM and an expense ratio of 0.12%.
YTD, GBIL has added $1.31 billion in AUM.
SPDR Portfolio Intermediate Term Corporate Bond ETF (NYSEARCA: SPIB)
SPIB added $203.08 million in net assets over the trailing week.
The SPDR Portfolio Intermediate Term Corporate Bond ETF is a low-cost fund that offers exposure to investment-grade corporate bonds with a maturity of between 1 and 10 years.
SPIB has $6.40 billion in AUM and an expense ratio of 0.04%.&nbsp;
SPIB has added $757.38 million in net assets YTD.
<h2>Losers</h2>
SPDR Bloomberg High Yield Bond ETF (NYSEARCA: JNK)
JNK lost $984.16 million in AUM on the week.
The SPDR Bloomberg High Yield Bond ETF offers exposure to so-called corporate junk bonds. These are middle-rated bonds with a minimum of one year to maturity.
JNK has $7.05 billion in AUM and an expense ratio of 0.4%. The fund has holdings in 32 companies, with the 10 largest comprising 60.30% of the fund.
YTD, JNK has lost $2.04 billion in AUM.
iShares Russell Top 200 Growth ETF (NYSEARCA: IWY)
IWY lost $710.36 million in net assets over the trailing week.
The iShares Russell Top 200 Growth ETF tracks the Russell Top 200 Growth Index, offering exposure to large-cap companies within the growth sector of the U.S. equity market.&nbsp;
JNK has $6.24 billion in AUM and an expense ratio of 0.20%. The fund has holdings in 111 companies, with the 10 largest comprising 58.75% of the fund.
The fund&rsquo;s largest holdings are Apple Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>) and Microsoft Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>) making up 14.13% and 12.90% of the fund, respectively.
IWY has added $449.10 million in net assets YTD.
Featured photo by<a href="https://unsplash.com/@sonance?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText"> Viktor Forgacs</a> on<a href="https://unsplash.com/photos/q8XSCZYh6D8?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText"> Unsplash</a>.

High Quality Bond Funds Get Bigger, Junk And Growth Fund Shrink -  ETF Winners And Losers: Mid-Cap Fund Flows

Yields on U.S. Treasury notes have been rising consistently throughout February, putting stock prices on the line.
The 10-year treasury bond came a hair&#8217;s breadth away from reaching the psychological mark of 4% on Wednesday, at 3.95%. Currently, yields stand at 3.92%.
High yields on treasury bonds normally pose a risk for stock prices, as investing in a risk-free asset like a fixed rate bond can become more attractive than equities, provided yields are high enough.
Related: <a href="https://www.benzinga.com/markets/22/09/28939183/does-it-even-make-sense-to-own-stocks-as-a-risk-free-4-siren-calls-your-name">Does It Even Make Sense To Own Stocks With Treasury Yields At 4%?</a>
Yields on the 10-year treasury note dropped slightly on Wednesday after the minutes from the latest FOMC <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/23/02/31014358/fed-minutes-show-a-few-participants-favored-0-5-hike-inflation-still-remains-unaccepta">meeting were released.</a>
Still, Wednesday's yields were the highest they&#8217;d been since November 2022, when they marked their highest point in over 14 years (since 2008). Yields on the 2-year treasury note are 4.6% at the time of writing and peaked at 4.72% on Tuesday.
Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-02-22/etf-traders-ditch-risk-assets-en-masse-pile-billions-into-bonds?sref=TBDibEcD#xj4y7vzkg">reported</a> an inflow into government bond ETFs of at least $2 billion on Wednesday.&nbsp;
The SPDR Portfolio Short Term Treasury ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPTS#NYSE">SPTS</a>) gained $908 million Wednesday morning, its biggest influx of funds in three years, according to the outlet. The iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) and the SPDR Bloomberg 1-3 Month T-Bill ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BIL#NYSE">BIL</a>) also received inflows of hundreds of millions.
ETFs following the S&amp;P 500 on the other hand, lost billions. At least $1.1 billion were withdrawn from each the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>).
Investors also dropped corporate bond ETFs like the SPDR Bloomberg High Yield Bond ETF (ACRA:JNK), which lost $1 billion in outflows.
Fixed-rate bonds tend to drop in price with rising interest rates, bringing their yields up. This makes the prospect of further hikes of the federal funds rate a good thesis for investing in government bonds. 
This idea is further supported by the fact that more monetary tightening by the Fed should have a negative impact on economic growth, causing company stock prices to head lower.
Now Read: <a href="https://www.benzinga.com/economics/macro-economic-events/23/02/31008742/soft-landing-or-recession-this-expert-explains-why-bears-expecting-an-imminent-cr">Soft Landing Or Recession? This Expert Explains Why Bears Expecting An Imminent Crash May Be Wrong</a>
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Treasury Yields Are Rising: What Will That Mean For Stocks As Investors Pivot To Government Bond ETFs?

The final week of February was packed with exciting news from the world of exchange traded funds. News emerged that the first zero-fee ETFs <a href="https://www.benzinga.com/news/19/02/13241315/zero-fee-etfs-its-happening-and-sofi-looks-to-be-the-first">are on their way </a>and that was met with a slew of fee cuts by industry giant Vanguard.
But wait. There&#39;s more.
<h3>What Happened</h3>
Last Friday, State Street Corp. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/stt#NYSE">STT</a>), the third-largest U.S. ETF issuer, said it&#39;s changing the name, index and investment objective for the fund currently known as the SPDR ICE BofAML Crossover Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cjnk#NYSE">CJNK</a>) while significantly lowering the annual fee on that product.
CJNK, which debuted in June 2012, follows the ICE BofAML US Diversified Crossover Corporate Index. Crossover bonds are corporate debt that reside where the lower end of the investment-grade and high-yield universes intersect.
<h3>Why It&#39;s Important</h3>
On April 1, CJNK will become the SPDR ICE BofAML Broad High Yield Bond ETF and transition to the widely followed ICE BofAML US High Yield Index. CJNK&#39;s ticker will remain the same, but its annual expense ratio will be pared by 25 basis points to 0.15 percent, or $15 on a $10,000 investment.
State is implementing a strategy it has previously used with other funds, launching a lower cost alternative to an existing product that is already heavily used by institutional investors. CJNK is becoming a cost-friendly alternative to the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnk#NYSE">JNK</a>).
JNK, the second-largest high-yield corporate bond ETF, is heavily used by institutional investors and charges 0.40 percent per year. Last year, State Street introduced the SPDR Gold MiniShares Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gldm#NYSE">GLDM</a>) as cheaper alternative to the SPDR Gold Shares (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>). The strategy is proving effective. GLDM charges 0.18 percent per year and has <a href="https://us.spdrs.com/en/etf/spdr-gold-minishares-trust-GLDM">amassed $639 million</a> in assets since coming to market last June, making it one of the most successful ETFs that debuted last year.
For its part, CJNK has some work to do to climb the ranks of junk bond ETFs as the fund has just <a href="https://us.spdrs.com/en/etf/spdr-ice-bofaml-crossover-corporate-bond-etf-CJNK">$71.63 million in assets</a>, but with the new fee of 0.15 percent, CJNK will be the cheapest junk bond ETF on the market by five basis points.
<h3>What&#39;s Next</h3>
Speaking of JNK, State Street said that ETF will be reverse split on April by a 1:3 ratio. The issuer expects the split to increase JNK&#39;s price to around $105, helping lower trading costs for clients using that fund.
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Long Ideas

Stock Split

CJNK

GLDM

Crossed Over: Crossover Bond ETF Will Become A Regular Junk Bond Fund

On a year-to-date basis, corporate bond exchange traded funds have been out of favor with fixed income investors amid fears of higher interest rates. Three of the top 10 ETFs in terms of 2018 outflows are corporate bond funds, including one junk bond ETF.
Many investors departed high-yield corporate bond ETFs earlier this year amid concerns about the Federal Reserve&#39;s plans to hike interest rates multiple times.
<h3>What Happened</h3>
While investors departed junk bond ETFs early in 2018, some data points indicate that tide is turning in favor of these funds.
&ldquo;Investors pulled money from high yield bond ETFs in the first quarter, but demand has been building since then, and to start the fourth quarter it has accelerated,&rdquo; <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth said in a Monday note.
&ldquo;Indeed, iShares iBoxx $High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>) had the largest day of inflows with more than $700 million to start the quarter. Nonetheless, the ETF was trading the next day at just a slight premium to its net asset value, confirming that unexpected trading volume is not necessarily a reason for concern.&rdquo;
HYG is the largest junk bond ETF in the U.S. Year-to-date, investors have pulled $1.99 billion from HYG, but the fund saw third-quarter inflows of just over $909 million.
<h3>Why It&#39;s Important</h3>
Some rivals to HYG have recently been adding money as well. Those funds include the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnk#NYSE">JNK</a>) and the Xtrackers USD High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hylb#NYSE">HYLB</a>).
&ldquo;High yield ETFs pulled in more than $1 billion in the first two days this month,&rdquo; said Rosenbluth. &ldquo;To put the recent demand in perspective, high yield corporate bonds gathered $2.4 billion in the third quarter, partially erasing the year-to-date outflows for the investment style.&nbsp; In contrast, investors consistently favored investment-grade corporate bond ETFs that provide greater capital preservation than their high-yield siblings.&rdquo;
Since the start of the fourth quarter, HYLB has seen inflows of $15.11 million. The ETF does not turn two years old until December and already has nearly $2 billion in assets under management.
<h3>What&#39;s Next</h3>
Corporate default rates are low this year, potentially enticing investors to embrace some of the credit risk associated with the aforementioned ETFs.
&ldquo;While the credit risks remain prevalent, the 61 global corporate defaults year-to-date tallied by S&amp;P Global Ratings are lower than in recent years,&rdquo; said Rosenbluth. &ldquo;According to CFRA Research, HYG, JNK and HYLB provided similar credit exposure, with approximately 47 percent&nbsp;of assets rated BB and 5 percent&nbsp;rated BBB.&rdquo;
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Feel The Love For Junk Bond ETFs

Junk bond ETFs have been suffering of late as investors in the United States have been shunning the high-risk segments of the domestic debt markets. Moreover, the recent fund flow reflects the shift in sentiment among investors and how they are adapting to changing circumstances.
What&#39;s Driving the ETFs?
The first quarter was dismal for the U.S. markets. Moreover, Wall Street saw a glum start to the second quarter, thanks to continued pessimism in the market. Although stocks grabbed most of investor attention, high yield credit also saw some loss in favor.
After a correction in early February owing to interest rate and inflation fears, markets recovered some of its losses to end the month on a slightly better note. However, March was not favorable for markets across the globe, as fresh trade war fears started affecting markets.
The recent market turmoil has been strongly weighing on investors&#39; risk appetite and making them reallocate their portfolios. The volatility has forced investors to safeguard their portfolios by allocating money to safer assets, in the event of a potential market breakdown.
Moving on to interest rates, the Federal Reserve hiked interest rates by 25 basis points in Powell&#39;s first meeting as chairman. The new benchmark funds rate was raised to 1.5% to 1.75% in March. Per the CME Fed watch tool, two more hikes are expected in 2018. This might lead to higher bond yields and lower bond prices, as the spread over treasuries decline.
Per an etf.com article citing FactSet <a href="http://www.etf.com/sections/features-and-news/bond-etf-flows-shift-safety?nopaging=1">data</a>, passively managed high-yield ETFs witnessed $5.4 billion in outflows in the first quarter of 2018. Moreover, owing to fears of rising rates, investors are flocking to duration hedged ETFs. Per FactSet data, duration-hedged ETFs received $509 million in the first quarter.
Below we discuss a few ETFs that seek to provide exposure to the high-yield space.
iShares iBoxx High Yield Corporate Bond ETF&nbsp;(NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>)
This fund has AUM of $15.1 billion and seeks to provide exposure to high-yield bonds. It charges 49 basis points as fees per year. From a sector look, Communications, Consumer Non-Cyclical and Energy are the top allocations of this fund, with 23.4%, 13.9% and 13.8% exposure, respectively. The fund targets the short-to-intermediate end of the yield curve as it has a weighted average maturity of 4.79 years and an effective duration of 3.85 years. The fund has lost 1.1% year to date but returned 2.5% in a year. It has a Zacks ETF Rank #4 (Sell) with a High risk outlook.
SPDR Bloomberg Barclays High Yield Bond ETF&nbsp;(NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>)
This fund has AUM of $8.8 billion and seeks to provide exposure to high-yield bonds. It charges 40 basis points as fees per year. From a sector look, Industrial, Finance and Utility are the top allocations of this fund, with 86.7%, 9.2% and 3.1% exposure, respectively. The fund targets the short-to-intermediate end of the yield curve as it has an average maturity of 6.16 years and option-adjusted duration of 4.06 years. The fund has lost 1.4% year to date but returned 2.7%in a year. It has a Zacks ETF Rank #4 with a High risk outlook.
PIMCO 0-5 Year High Yield Corporate Bond Index Fund&nbsp;(NYSE: <a class="ticker" href="/stock/hys#NYSE">HYS</a>)
This fund has AUM of $1.6 billion and seeks to provide exposure to high-yield bonds. It charges 55 basis points as fees per year. From a sector look, High Yield Credit, Investment Grade Credit and U.S. Government-Related are the top allocations of this fund, with 97.9%, 1.2% and 0.6% exposure, respectively. The fund targets the short end of the yield curve as it has a weighted average maturity of 3.24 years and an effective duration of 2.09 years. The fund has returned 3.6% in a year. It has a Zacks ETF Rank #4 with a High risk outlook.
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Futures

Why You Should Steer Clear Of Junk Bond ETFs

Skittish fixed income investors often dodge high-yield corporate bonds and the related exchange-traded funds. That is happening in a big way this year as the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>) are bleeding assets.
JNK and HYG have lost more than $7 billion in assets on combined basis, ranking the ETFs <a href="http://www.etf.com/etfanalytics/etf-fund-flows-tool">fifth and sixth </a>for year-to-date outflows. HYG and JNK are the two largest junk bond ETFs in the U.S. Investors looking for the income advantages of junk bonds with reduced volatility can consider the IQ S&amp;P High Yield Low Volatility Bd ETF (NYSE: <a class="ticker" href="/stock/hylv#NYSE">HYLV</a>).
HYLV is just over a year old and tracks the <a href="https://www.nylinvestments.com/IQetfs/indexes/S&amp;P-High-Yield-Low-Volatility-Corporate-Bond-Index">S&amp;P High Yield Low Volatility Corporate Bond Index</a>. That benchmark &ldquo;is compromised of U.S. dollar denominated high yield corporate bonds that have been selected in accordance with a rules-based methodology that seeks to identify securities that, in the aggregate, are expected to have lower volatility relative to the broad U.S. dollar denominated high yield corporate bond market,&rdquo; <a href="https://www.nylinvestments.com/IQetfs/etfs/IQ-S&amp;P-High-Yield-Low-Volatility-Bond-ETF">according to IndexIQ</a>.
HYLV&#39;s index launched in late 2016 and is benchmarked to the more traditional <a href="http://spindices.com/indices/fixed-income/sp-us-high-yield-corporate-bond-index">S&amp;P U.S. High Yield Corporate Bond Index</a>.
<h3>
	Inside HYLV</h3>
An obvious volatility reduction technique for any high-yield bond fund would avoiding CCC- and lower-rated debt as those are usually the most speculative junk bonds. HYLV does that as just 0.10 percent of its roster is allocated to bonds rated CCC+. Rather, more than 84 percent of HYLV&#39;s holdings are rated BB+, BB or BB-.
Over 36 percent of HYLV&#39;s holdings are from consumer discretionary and financial services issuers. HYLV&#39;s underlying index employs marginal contribution to risk (MCR) as a way ranking bonds in its selection universe, a strategy that helps it steer clear of the riskiest credits.
HYLV has a 30-day SEC yield of 3.96 percent, which is below the likes of HYG and JNK, but that&#39;s the trade-off to access HYLV&#39;s superior credit quality. The effective duration on HYLV is just over four years.
<h3>
	Doing Its Job</h3>
Last year, HYLV&#39;s index did its job in terms of being less volatile than rival benchmarks.
&ldquo;The HYLV index did show lower volatility, at 1.67 percent compared to 2.0 percent for the benchmark,&rdquo; said <a href="http://www.indexologyblog.com/2018/03/28/performance-analysis-of-the-sp-high-yield-low-volatility-corporate-bond-index-for-2017/">S&amp;P Dow Jones Indices</a>. &ldquo;The negative correlation of -0.66 between these two variables indicates that when the broad high yield universe benefited from spread tightening, the HYLV index underperformed the benchmark from spread changes, and that spread widening would have less downward impact on the HYLV index than the benchmark.&rdquo;
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HYLV

A Junk Bond ETF For Jittery Investors

Traders are bearish on high-yield corporate debt exchange traded funds (ETFs). Data confirm as much. For the week ended Feb. 27th, investors have yanked $171.3 million from the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>), the largest junk bond ETF.
Only six ETFs saw larger outflows over that period than did HYG. Year-to-date, the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>) and HYG have bled $3.43 billion and $2.81 billion, respectively. That places JNK and HYG sixth and eighth among US-listed ETFs in terms of 2018 outflows.
Data suggest traders are not relenting when it comes to shorting junk bond ETFs. Those bearish views could mean opportunity with the Direxion Daily High Yield Bear 2X Shares (NYSE: <a class="ticker" href="/stock/hydd#NYSE">HYDD</a>).
<h3>
	What The Data Say</h3>
For HYG and JNK, bearish trading data points are mounting.
&ldquo;Short interest as a percentage of shares outstanding on the $15 billion iShares iBoxx $ High Yield Corporate Bond ETF, ticker HYG, hit an all-time high of 29 percent Monday, Markit data show,&rdquo; <a href="https://www.bloomberg.com/news/articles/2018-02-28/short-interest-in-high-yield-etfs-hits-record-as-rate-rises-loom">reports Bloomberg</a>. &ldquo;Add elevated shorts on the SPDR Bloomberg Barclays High Yield Bond ETF, ticker JNK, in concert with a European counterpart, and bearish sentiment has piled up even as junk-bond spreads recover from the selloff earlier this month.&rdquo;
HYG and JNK lost an average of 1.65 percent in February while HYDD posted a February gain of 3.4 percent. HYDD attempts to deliver double the daily inverse performance of the Bloomberg Barclays US High Yield Very Liquid Index, <a href="http://www.direxioninvestments.com/products/daily-high-yield-bear-2x-shares">according to Direxion</a>.
<h3>
	More On HYDD</h3>
HYDD&#39;s underlying index &ldquo;includes bonds that have a remaining maturity of at least one year, are rated high-yield (Ba1/BB+/BB+ or below) using the middle rating of Moody&rsquo;s, Fitch or Standard &amp; Poor&rsquo;s, respectively, and have $500 million or more of outstanding face value,&rdquo; <a href="http://www.direxioninvestments.com/products/daily-high-yield-bear-2x-shares">according to Direxion</a>.
Nearly 22.5 percent of the index&#39;s holdings are issued by communications firms while over 30 percent hail from the two consumer sectors.
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Short Ideas

HYDD

How To Be Aggressively Bearish On Junk Bonds

<a href="https://www.benzinga.com/topic/fis-astec-analytics">FIS Astec Analytics</a> has released its weekly list of the most popular stocks among short sellers. This week&rsquo;s list is topped by a dating website company making its first appearance on the list.
Here&rsquo;s a rundown of this week&rsquo;s hottest stocks among short sellers.
<h3>
	Top Pick: Match Group</h3>
Short sellers clearly see the gains&nbsp;Match Group Inc (NASDAQ: <a class="ticker" href="/stock/mtch#NASDAQ">MTCH</a>) logged in recent months as an opportunity to profit on the stock&rsquo;s ultimate downfall. In the month of February, short interest surged 51 percent, pushing utilization rates as high as 94 percent before a fresh batch of supply hit the market.
<h3>
	Tesla</h3>
Short volume in Tesla Inc (NASDAQ: <a class="ticker" href="/stock/tsla#NASDAQ">TSLA</a>) increased 5 percent over the past two weeks as the company <a href="https://www.benzinga.com/news/18/02/11177585/tesla-clarifies-elon-musks-q4-conference-call-statement-on-production-rates">continues to struggle</a> to hit Model 3 production targets. Despite a rising supply of available shares, utilization remains at an elevated 73 percent.
<h3>
	Barclay&rsquo;s Junk Bond ETF</h3>
Short sellers have turned very bearish on the SPDR Barlcay&rsquo;s Capital High Yield Bnd ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>) now that interest rates appear to be on the rise. FIS Astec reports that 98 percent of available shares are being utilized.
<h3>
	Fossil Group</h3>
Fossil Group Inc (NASDAQ: <a class="ticker" href="/stock/fosl#NASDAQ">FOSL</a>) experienced a huge pop following its most recent earnings report, but short sellers were quick&nbsp; to jump in and bet the move wouldn&rsquo;t last. FIS Astec reports Fossil just hit a new 12-month high in short interest, and its utilization rate stands at 91 percent.
<h3>
	Iconix Brands</h3>
Iconix Brand Group Inc (NASDAQ: <a class="ticker" href="/stock/icon#NASDAQ">ICON</a>) is the second stock to debut on the hot shorts list this week. The apparel stock has tumbled 82 percent in the last year, but short sellers are hanging on for the ride, with utilization at 83 percent.
<h3>
	Under Armour</h3>
Under Armour Inc (NYSE: <a class="ticker" href="/stock/uaa#NYSE">UAA</a>) has been a regular on the top shorts list for months. After easing at the end of 2017, short interest has surged in recent weeks, and short sellers now hold 90 percent of available <a href="https://www.benzinga.com/stock/ua">shares</a>.
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Analyst Color

Short Sellers

Analyst Ratings

FOSL

ICON

MTCH

TSLA

New Names, Old Classics Among Short Sellers' Top Stocks

Recent turbulence in equities made its way to the corporate bond space. Last week, spreads on the Morningstar Corporate Bond Index, an investment-grade corporate bond gauge, and the BofA Merrill Lynch High Yield Master Index, <a href="http://www.morningstar.com/articles/849167/contagion-from-equity-market-volatility-spreads-to-corporate-bond-market.html">shot higher.</a>
While traditional investment-grade and junk bond funds were hit hard amid last week&#39;s equity market sell-off, some short-term corporate bond exchange traded funds are proving to be better options in the early stages of 2018. The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/lqd#NYSE">LQD</a>), the largest corporate bond ETF, has an effective duration of 8.4 years.
&ldquo;The greater the interest rate or credit risk an ETF takes on, the higher the expected return,&rdquo; <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth said in a Tuesday note. &ldquo;LQD has an average duration of 8.4 years, which contributes negatively to our overall rating but is offset by a variety of other factors, including the investment-grade quality of its holdings.&rdquo;
<h3>
	Other Ideas</h3>
Investors looking to trim duration risk with corporate bond ETFs have some viable options to consider. For example, the $737.9-million iShares 0-5 Year Investment Grade Corporate Bond ETF (NASDAQ: <a class="ticker" href="/stock/slqd#NASDAQ">SLQD</a>) holds over 1,100 corporate bonds, all with maturities of less than five years.
Relative to LQD, &ldquo;SLQD has an average duration of just 2.3 years and charges an even lower expense ratio than LQD (0.06 percent vs. 0.15 percent),&rdquo; said Rosenbluth. &ldquo;At the end of January, SLQD had 42 percent of its $740 million in assets in bonds rated A or equivalent by major rating agencies and 40 percent rated BBB. Naturally, a smaller ETF like SLQD trades less frequently than LQD, but SLQD&rsquo;s bid/ask spread was relatively tight at 2 cents. Year to date through Feb. 9, SLQD lost just 0.34 percent, a narrower decline than its iShares sibling.&rdquo;
SLQD has a 30-day SEC yield of 2.56 percent.
<h3>
	Junk, Too</h3>
The SPDR Bloomberg Barclays Short Term High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/sjnk#NYSE">SJNK</a>) is the shorter duration cousin to the popular SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>), the second-largest junk bond ETF.
SJNK &ldquo;launched in 2012 and provides similar credit exposure as JNK (39 percent of its $4 billion of assets in both BB- and B-rated bonds), but with duration of just 2.2 years,&rdquo; said Rosenbluth. &ldquo;The lower interest rate risk helped to limit the downside in recent weeks, as SJNK&rsquo;s total return was only down 0.32 percent. SJNK also trades less frequently than its longer-term peer, but has a tight 1-cent bid/ask spread to go along with its 0.40 percent expense ratio.&rdquo;
CFRA has Overweight ratings on SLQD and SJNK.
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SLQD

Short Considerations With Corporate Bond ETFs

Junk bond ETFs had a muted run in 2017 with popular funds SPDR Barclays High Yield Bond ETF <a href="http://www.zacks.com/stock/quote/JNK">JNK</a> andiShares iBoxx High Yield Corporate Bond ETF <a href="http://www.zacks.com/stock/quote/HYG">HYG</a> returning only 0.2% in the last one year (as of Jan 10, 2018) against 20.8% gains for the S&amp;P 500 index.
Though junk bonds tend to put up a similar performance as that of equities, last year opposed the fact.
This makes it more important to have a look at how junk bond ETFs could perform this year. While there is strength latent in the space, roadblocks are also waiting.
Oil Price Recovery: A Boon 
Last year, oil price volatility weighed on the space, especially on energy bonds. This was because the U.S. energy companies spread their presence widely to the high-yield bond market to materialize the shale-oil boom. Thus, fears of their default amid oil price pressure prompted junk bond sell-offs (read: <a href="https://www.zacks.com/stock/news/287655/oil-sees-strong-start-to-2018-in-4-years-etfs-to-play">Oil Sees Strong Start to 2018 in 4 Years: ETFs to Play</a>).
Now, oil prices have made a sharp comeback to close out the year 2017, though the whole year has not been so smooth. West Texas Intermediate futures jumped over $60 a barrel in late December for the first time&nbsp;<a href="http://calgaryherald.com/business/energy/oil-trades-near-two-year-high-after-libya-pipeline-explosion">since 2015</a>. In a nutshell, if oil prices can maintain the uptrend throughout 2018, junk bond ETFs can see some recovery (read: <a href="https://www.zacks.com/stock/news/288140/3-sector-etfs-for-2018">3 Sector ETFs for 2018</a>).
GOP Tax Plan is Negative for Junk Bonds
While the tax-cut bill was a boon to the stock market, a third of the highly-leveraged companies may see their profits decline based on what congressional Republicans do. As per Moody&#39;s Investors Service, based on the latest tax bill &quot;<a href="https://www.marketwatch.com/story/a-third-of-junk-rated-companies-at-risk-from-republican-tax-plan-moodys-finds-2017-12-12">full upfront capital expenditure deductibility</a> and the limitation on interest deductibility&quot; may put junk-rated companies at risk.
As per&nbsp;<a href="https://www.thestreet.com/story/14423087/1/how-tax-reform-could-be-bearish-for-small-caps-market-recon.html?puc=yahoo&amp;cm_ven=YAHOO&amp;yptr=yahoo">an article published</a>&nbsp;on thestreet.com, the previous law entailed full deduction of interest paid. The new law will hold companies back from relying too much on debt. There is a provision in the tax blueprint that calls for limiting &quot;deductions to 30% of EBITDA (earnings before interest, taxes, depreciation, and amortization) for four years, and 30% of EBIT after that (read: <a href="https://www.zacks.com/stock/news/286440/tax-reform-a-boon-or-bane-for-smallcap-etfs">Tax Reform: A Boon or Bane for Small-Cap ETFs?</a>).&quot;
Bond market veteran Jeff Gundlach indicated that the tax plan&#39;s changes to interest-rate deductibility could hurt the $1.5 trillion junk bond market. Companies that normally issue high-interest debt are inclined to have highly leveraged balance sheets and look toward of benefiting from deducting their interest expenses from taxable earnings. If these tax benefits are limited, the risk of the most indebted issuers defaulting would be higher.
There is more to the story. As per an article published on CNBC.com, &quot;the <a href="https://www.cnbc.com/2017/12/13/gundlach-tax-plan-could-have-some-unintended-consequences-hurt-junk-bond-market.html">tax plan would raise</a> taxes in states like California, New York and New Jersey, which are already high tax-paying states. Gundlach said it would likely make people in those states less willing to buy stocks and risk assets.&quot;
Rising Bond Yields 
The start of 2018 has shaken the fixed income world thanks to the steep rise in yields. As of Jan 10, 2018, the yield on the benchmark 10-year Treasury note was 2.55% while the year started with a benchmark bond yield of 2.46%. Several developed global central banks are eyeing policy tightening this year. The tendency has kept U.S. Treasury yields on an upward trajectory.
Investors should note that the Fed has enacted five rate hikes since December 2015. Though benchmark Treasury bond yields remained at subdued levels throughout 2017, many Fed officials also gave hawkish comments recently. Junk bond ETFs, known for higher yields, are likely to underperform in a rising rate environment.
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Junk Bond ETFs: What's In Store For 2018?

High-yield corporate bond exchange traded funds sold off last week, but some bond market observers believe the sudden retrenchment in junk bond market wasn&#39;t surprising.
The iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>), the two largest junk bond ETFs by assets, are both down 2 percent over the past week. Investors are departing junk bond ETFs, but even with the recent outflows, HYG and JNK have nearly $30 billion in assets under management. Given that heft, when these ETFs cough, many traders ponder whether equity markets are getting a cold.
Compressed spreads are seen as a contributing factor to last week&#39;s junk bond ETF pullback. Junk bond spreads are a measure of credit risk.
<h3>
	Analyzing Spreads </h3>
&ldquo;The sell-off should not have been much of a surprise given how tight high yield spreads had become. To start November, high yield bond spreads&mdash;a measure of credit risk&mdash;were 34 percent below their 20-year median,&rdquo; <a href="http://blog.spdrs.com/post/3-charts-the-high-yield-sell-off-and-implications-for-risk-assets">said State Street</a>. &ldquo;These spreads have compressed by more than 150 basis points in the last year alone. A little mean reversion was therefore not unfathomable given the yearlong rally in high yield.&rdquo;&nbsp;
JNK holds just over 970 junk bonds, of which more than 15 percent carry speculative CCC ratings or lower. HYG holds over 1,000 issues of which a combined 11.7 percent are rated CCC or CC. Those tighter spreads could continue to be a problem for HYG and JNK.
&ldquo;The high yield market did look a bit stretched, as spreads had tightened considerably and convexity turned noticeably negative,&rdquo; said SSgA. &ldquo;Looking ahead, the call provisions embedded in these bonds may still limit future high yield gains, as issuers may call higher coupon bonds and replace them with lower coupon notes based on the lower prevailing market rate, resulting in an asymmetrical return profile with more downside than upside.&rdquo;
<h3>
	Problematic Politics</h3>
Another factor working against riskier fixed income assets is the Trump Administration&#39;s tax reform effort, which was initially cheered by markets, but is now a source of consternation because investors are doubting whether or not the tax bill will even be voted on before the end of 2017.
&ldquo;As jitters arose that <a href="http://blog.spdrs.com/post/charting-the-market-4-charts-that-capture-the-markets-reaction-to-tax-reform" target="_blank">tax reform</a> might go the way of health care reform at the same time the market faces a looming <a href="http://blog.spdrs.com/tags/debt%20ceiling%20debate" target="_blank">debt ceiling debate</a>, risk assets sold off,&rdquo; said SSgA. &ldquo;High yield did not lead the way. High yield fell more than large-cap stocks, as represented by the S&amp;P 500 Index. But small-cap stocks, which are more domestically oriented than large caps and tend to have higher taxes, fell more than high yield.&rdquo;
Related Links:
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<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/11/10776198/its-not-always-about-fees-with-etfs">It&#39;s Not Always About Fees With ETFs</a>

Why Investors Got Skittish About Junk Bond ETFs

Equity-based exchange-traded funds are still the kings of the ETF universe, a throne unlikely to be relinquished anytime soon, but data suggest bond funds will be integral components of ETF growth. Increased <a href="http://www.investopedia.com/news/dont-doubt-data-bond-etfs-will-keep-growing-lqd/">adoption among financial advisors</a> is seen as a significant growth frontier for bond ETFs.
<h3>Equity-Based ETFs And Their Appeal</h3>
A recent survey conducted by Cerulli Associates in conjunction with BlackRock, Inc. (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>), the parent company of ETF giant iShares, confirms advisors are expected to ratchet up their use of bond ETFs.
&ldquo;Advisors are increasingly gaining comfort in using bond ETFs to build portfolios and continue to plan to move assets away from mutual funds and individual bonds,&rdquo; said <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Head of ETF &amp; Mutual Fund Research Todd Rosenbluth in a note out Monday. &ldquo;Yet, relative to equity ETFs, more advisors favor the diversification and ease of exposure benefits of these products, while viewing performance as less meaningful.&rdquo;
<h3>The Breakdown</h3>
As CFRA noted, bond ETFs combine for 18 percent of ETF assets under management, but represent 28 percent of this year&#39;s inflows. This year, investors have been favoring short-term bond ETFs, such as the iShares Core 1-5 Year USD Bond ETF (NYSE: <a class="ticker" href="/stock/istb#NYSE">ISTB</a>) and Vanguard Short-Term Bond ETF (NYSE: <a class="ticker" href="/stock/bsv#NYSE">BSV</a>).
Part of the reason ISTB and BSV are popular with investors are paltry annual fees of 0.08 percent and 0.07 percent, respectively.
&ldquo;ISTB&#39;s three-year track record as of May 31 of 1.41 percent was ahead of BSV&#39;s 1.13 percent. The iShares product sports a higher yield, due to greater exposure to investment-grade corporate bonds and less exposure to government bonds,&rdquo; said Rosenbluth.
High-yield funds, including the iShares iBoxx $ High Yield Corporate Bond (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>), PowerShares Fundamental High Yield Corporate Bond Portfolio (NYSE: <a class="ticker" href="/stock/phb#NYSE">PHB</a>) and SPDR Barclays High Yield Corporate Bond (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>), are also expected to be <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/05/9483824/renewed-interest-in-a-nifty-junk-bond-etf">big drivers of bond ETF</a> growth among advisors.
&ldquo;PHB has more in BBB-rated securities (13 percent of assets) than its peers, while JNK takes on more credit risk and has 16 percent in bonds rated CCC or higher; HYG has more diversification across the credit rating buckets that PHB and JNK. These ETFs have a combined $30 billion in assets under management,&rdquo; said Rosenbluth.
CFRA has Overweight ratings on the aforementioned junk bond ETFs and Market-Weight ratings on BSV and ISTB.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/01/8968972/advisors-continue-allocating-assets-to-etfs">Advisors Continue Allocating Assets To ETFs</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/05/9380776/cheaper-not-always-better-with-etfs">Cheaper Not Always Better With ETFs</a>

ISTB

PowerShares Fundamental High Yieldorate Bond Portfolio

Advisors Will Fuel Bond ETF Asset Growth

It is often said that new exchange-traded funds struggle to attract an audience. Likewise, many industry observers are wondering the smart beta phenomenon will truly penetrate the fixed income space.
The IQ Enhanced Core Plus Bond U.S. ETF (NYSE: AGGP) addresses both of those concerns. Now a year old, AGGP has hauled in $235 million in assets, easily making it one of the most successful ETFs to come to market last year. And yes, AGGP can be classified as a smart beta bond ETF.
<h3>Amid Other Fixed Income ETFs, AGGP Shines</h3>
The IQ Enhanced Core Plus Bond U.S. ETF follows the IQ Enhanced Core Plus Bond U.S. Index. AGGP is an ETF of ETFs. AGGP can allocate up to 25 percent of its portfolio to high-yield corporate bonds and up to 5 percent to emerging markets debt, <a href="https://www.nylinvestments.com/IQetfs/etfs/IQ-Enhanced-Core-Plus-Bond-US-ETF">according to IndexIQ</a>.
AGGP&#39;s biggest holdings include some of the biggest bond ETFs, such as the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/lqd#NYSE">LQD</a>), the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>). LQD is the largest investment-grade corporate bond ETF while HYG and JNK are the two largest junk bond ETFs.
&ldquo;AGGP invests primarily, through exchange-traded products (ETPs), in U.S. Treasurys, U.S. investment grade corporate bonds, and U.S. investment grade mortgage-backed securities, and can allocate up to 25 percent in U.S. high yield debt and up to 5 percent in U.S. dollar denominated debt of emerging market issuers,&rdquo; <a href="https://www.nylinvestments.com/IQetfs/etfs/IQ-Enhanced-Core-Plus-Bond-US-ETF">according to the ETF&#39;s issuer</a>.
Based on a unique momentum methodology previously not seen in the fixed income ETF arena, AGGP can help investors boost income and yield. For example, the ETF&#39;s 30-day SEC yield of almost 3.2 percent is well above what is available on 10-year Treasuries.
This year, AGGP&#39;s exposure to high-yield and emerging markets debt has been steady, but in March, the ETF significantly increased its exposure to short-term U.S. government debt and investment-grade corporates while significantly reducing its exposure to mortgage-backed securities and intermediate-term Treasuries.
AGGP charges 0.35 percent per year, or $35 on a $10,000 investment.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/05/9443012/a-new-etf-is-an-active-idea-for-income">A New ETF Is An Active Idea For Income</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/05/9389975/5-donald-trump-inspired-leveraged-etfs-make-their-debut">5 Donald Trump-Inspired Leveraged ETFs Make Their Debut</a>

A Rising Star Among Bond ETFs

High-yield corporate bonds are often viewed as one of the more volatile corners of the fixed-income universe. A new exchange-traded fund could help investors access the advantages of junk bonds while mitigating some of the volatility.
The IQ S&amp;P High Yield Low Volatility Bond ETF (NYSE: HYLV) debuted last week as the latest addition to IQ&#39;s lineup of unique fixed-income ETFs. HYLV tracks the S&amp;P U.S. High Yield Low Volatility Corporate Bond Index, which &ldquo;is compromised of U.S. dollar denominated high yield corporate bonds that have been selected in accordance with a rules-based methodology that seeks to identify securities that, in the aggregate, are expected to have lower volatility relative to the broad U.S. dollar denominated high yield corporate bond market,&rdquo; <a href="https://www.nylinvestments.com/IQetfs/indexes/S&amp;P-High-Yield-Low-Volatility-Corporate-Bond-Index">according to IndexIQ</a>, a unit of MainStay Investments.
Related Link: <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/02/9057087/pour-a-glass-of-this-new-water-etf">Pour A Glass Of This New Water ETF</a>
<h3>Hello, HYLV</h3>
HYLV&#39;s underlying index caps individual issuers at 3 percent. The index allocates over 22 percent of its weight to bonds issued by consumer discretionary companies. High-yield debt from financial services and telecom issuers combine for over a quarter of the index&#39;s weight, <a href="http://www.nylinvestments.com/polos/MEHYLV05-021765768.pdf">according to issuer data</a>. Junk debt hailing from the materials and energy sectors combine for over 20 percent of the index&#39;s weight.
HYLV has an effective duration of 4.32 years. Duration measures a bond&#39;s sensitivity to changes in interest rates. Of the bonds found in HYLV&#39;s index, 62.5 percent are rated BB+ or BB.
HYLV joins the IQ Enhanced Core Bond U.S. ETF (NYSE: <a class="ticker" href="/stock/agge#NYSE">AGGE</a>) and the IQ Enhanced Core Plus Bond U.S. ETF (NYSE: AGGP) in the IQ bond ETF stable. AGGE tracks the IQ Enhanced Core Bond U.S. Index.
Those ETFs have about $330 million in combined assets under management, making them two of the more successful bond ETFs to come to market last year.
HYLV charges 0.4 percent per year, or $40 on a $10,000 investment.

AGGE

A New ETF Reduces Junk Bond Volatility

The Federal Reserve&#39;s plans for interest rates will remain front and center for fixed income investors this year, but that does not mean high-yield corporate bond exchange-traded funds should be ignored by income investors.
Even as global corporate defaults surged last year, investors poured into popular junk bond ETFs, including the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR Bloomberg Barclays High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>). HYG and JNK are the two largest U.S. junk bond ETFs by assets.
<h3>Digging For Gems In Junk</h3>
While many investors believe junk bonds are a corner of the market where active management thrives, data support the idea that passive products like HYG and JNK are superior bets. For the three years ending last year, just 20 percent of active high-yield bond funds beat their benchmarks while that number drops to 11 percent over the trailing five years, <a href="http://cfraresearch.com/">according to CFRA Research</a>.
High fees put active junk bond funds at a disadvantage relative<a href="https://www.benzinga.com/analyst-ratings/analyst-color/16/08/8385116/passive-approach-can-serve-investors-well-with-junk-bond"> to their passive rivals</a>.
&ldquo;The 1.1 percent average net expense ratio for funds in Lipper&rsquo;s high yield mutual fund peer group limits the investment style from keeping up. High fees might have been less concerning in a strong 2016 &mdash; the average fund climbed 13.3 percent. But if returns are more similar to the mid-single-digit gains that were achieved in 2013 and 2014 or losses achieved in 2015, performance of expensive funds will be dragged lower,&rdquo; said CFRA in a note out Monday.
<h3>The Bottom Line</h3>
HYG and JNK charge 0.49 percent and 0.4 percent, respectively, per year. Even the PowerShares Fundamental High Yield Corporate Bond Portfolio (NYSE: <a class="ticker" href="/stock/phb#NYSE">PHB</a>), a smart beta spin on junk bonds, is cheaper than active equivalent. PHB charges half a percent per year.
The $1.27 billion PHB follows the RAFI &nbsp;Bonds US High Yield 1-10 Index and has an effective duration of 3.7 years. HYG&#39;s duration is almost 3.9 years while JNK&#39;s modified adjusted duration is nearly 4.1 years. Duration is a measure of a bond&#39;s sensitivity to changes in interest rates.
CFRA Research has Overweight ratings on HYG, JNK and PHB.

Warming Up To Junk Bond ETFs In 2017

There is always room for more in the world of exchange-traded funds, and now there is a new competitor in the high-yield corporate bond ETF arena. The Deutsche X-trackers USD High Yield Corporate Bond ETF (NYSE: HYLB) debuted on Wednesday.
<h3>How To Compete? Charge Low Fees</h3>
HYLB faces stiff, entrenched competition from the likes of the iShares iBoxx $ High Yid Corp Bond (ETF) (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>) and the SPDR Barclays Capital High Yield Bnd ETF (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>), the two largest junk bond ETFs in the United States.
Deutsche Asset Management (Deutsche AM), HYLB&#39;s issuer, is obviously aware of the intense competition facing any new high-yield corporate bond ETF and the need to catch investors&#39; attention in this hyper-competitive ETF segment. &ldquo;Obviously&rdquo; because HYLB charges just 0.25 percent per year in fees.
That equates to $25 on a $10,000 stake, good for the lowest fee of any U.S. high-yield corporate bond ETF. HYG and JNK charge 0.49 percent and 0.4 percent, respectively, per year. 
<h3>Index, Holdings And Exposures</h3>
HYLB tracks the Solactive USD High Yield Corporates Total Market Index and is home to 47 bonds. Over 85 percent are courtesy of U.S. issuers with another 4.3 percent hailing from Canada. The remainder of the new ETF&#39;s lineup are European junk bonds. HYLB&#39;s top 10 holdings combine for over 31 percent of the ETF&#39;s weight.
<h3>Debut Timing</h3>
The timing of HYLB&#39;s debut is curious as some traders have been targeting legacy junk bond ETFs for bearish trades ahead of next week&#39;s Federal Reserve meeting, which is expected to produce 2016&#39;s first interest rate increase.
As <a href="http://www.benzinga.com/news/16/12/8768589/the-bond-bears-growled-in-november">Benzinga reported earlier this week</a>: &ldquo;&lsquo;High yield bonds are by far and away the most in demand from short sellers as the two largest US listed funds that invest in the asset class, the iShares iBoxx $ High Yield Corporate Bond Fund and the Spdr Bloomberg Barclays High Yield Bond ETF make up half the aggregate bond ETF borrow with $2.9 billion and $1.3 billion of these funds now out on loan respectively. The recent volatility hasn&rsquo;t spurred much additional borrow demand for these funds however as both their value on loan have been relatively flat over the last month,&rsquo; added Markit.&rdquo;
HYLB is the eleventh fixed income fund in Deutsche AM&#39;s stable and the third such ETF introduced by the firm this year. Ten of the issuer&#39;s bond ETFs have debuted since March 2015.

Junk Bond ETF Competition Gets Another Contender

Hard Or Soft Landing, A Consistent Story For High Yield

Last week, I thought for sure that the market would need more time near the recent lows before it could move higher. However, prices are now pushing up towards all-time highs once again.

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SPDR Bloomberg High Yield Bond ETF

Overview

SPDR Bloomberg High Yield Bond ETF (ARCA:JNK), Quote.Headers.trade-ideas