Fed Rate Hike Inspires Buyers Of Corporate Bond Funds (HYG)

Analyst/ETF Trader Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today looks big inflows back into corporate bond funds, corresponding outflows from long-dated Treasuries, and interesting outflows from an inverse volatility ETF.

We have seen some assets in motion in Fixed Income ETFs in recent sessions, following last week’s FOMC rate decision, with some buyers in High Yield Corporate Bonds via HYG (iShares iBoxx $ HY Corporate Bond, $690 million in) and Investment Grade Corporate Bonds via LQD (iShares iBoxx $ Investment Grade Corporate Bond, $435 million in).

On the flipside, there has been some profit taking in long-dated Treasuries via TLT (iShares 20+ Year Treasury Bond, over $500 million out), as the fund traded at its highest levels since right before Trump was elected last November.

Elsewhere, we have seen some notable trading in a Volatility ETF, SVXY (ProShares Short VIX Short-Term Futures ETF), which has consisted of redemptions topping $135 million into strength in the ETF lately (we note that the VIX itself still has a $10 handle and have mentioned the contango that typically exists in the VIX futures market which would help this product being it is “Short” Volatility). SVXY has recently traded at an all-time high, so some position trimming here makes sense conceptually.

The iShares iBoxx $ High Yid Corp Bond ETF (NYSE:HYG) was trading at $88.03 per share on Wednesday morning, down $0.08 (-0.09%). Year-to-date, HYG has gained 1.71%, versus a 8.85% rise in the benchmark S&P 500 index during the same period.

HYG currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 38 ETFs in the High Yield Bond ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.