Defensive Strategies For High Yield Bond ETFs
Written by David Fabian, November 15th, 2017
Since early 2016, the trend in credit-sensitive securities has been predominantly higher as yield spreads compress and risk behavior leans on the bullish side. Income-focused investors have poured billions of dollars into exchange-traded funds that track these markets, led by the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and SPDR High Yield Corporate Bond ETF (JNK).
More recently, HYG and JNK have exhibited several sharp down days despite the relative calm buoying the global equity markets. This divergence has many bond investors worried about the future growth prospects of high yield debt and whether they should shield their gains from a potential correction in risk assets.