While the trading has not been in immense size as of yet, on a quiet tape the activity still catches our attention, primarily since HYG has rallied the past couple sessions back above its 50 day MA after faltering several times earlier in August. Year-to-date, the fund has struggled a bit in terms of asset flows, with over $1 billion leaving the door via redemption pressure, while competing ETF the $11.7 billion JNK (SPDR Barclays High Yield Bond, Expense Ratio 0.40%) has had similar luck (losing $630 million YTD).
Even with the rally in bond prices the past couple sessions, HYG is about 1.2% off of its 52-week high at present levels, and when one looks at a six month chart we can see the tremendous rally that Corporate Bond prices had (amid a steep fall in yields) since the end of March of this year. Note that the current yield in HYG is 5.03%, and 5.62% in JNK, which are historically very low levels.
There are actually five other “High Yield Bond” or “Junk” funds out there, including SJNK (SPDR Barclays Capital Short Term High Yield Bond, Expense Ratio 0.40%), SHYG (iShares 0-5 Year High Yield Corporate Bond, Expense Ratio 0.30%), HYS (PIMCO 0-5 Year High Yield Corporate Bond, Expense Ratio 0.55%), HYLS (First Trust Tactical High Yield, Expense Ratio 0.95%), and PHB (PowerShares High Yield Corporate Bond, Expense Ratio 0.50%), which have north of $1 billion in assets in addition to HYG and JNK in the U.S. listed landscape, so clearly there is immense investment interest across both institutional and retail ETF investors in this space.
With 1,029 individual bond holdings currently, it is interesting to see which industry sectors are currently at the top end of the portfolio in terms of weightings in the “Junk” space. Presently we see exposures as follows: Communications (25.09%), Consumer Staples (13.57%), Consumer Discretionary (13.03%), Energy (12.40%), and Technology (7.88%).
The iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) was trading at $87.95 per share on Thursday afternoon, up $0.02 (+0.02%). Year-to-date, HYG has gained 4.27%, versus a 10.31% rise in the benchmark S&P 500 index during the same period.
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.
Paul 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.