- The iShares iBoxx High-Yield Corporate Debt ETF (NYSEARCA:HYG) saw $1.5B of outflows last month - the most in a year. Short interest also rose to its highest level of the year.
- The SPDR Bloomberg Barclays (LON:BARC) High-Yield Bond ETF (NYSEARCA:JNK) suffered $424M in outflows, bringing the three-month total to $1.4B. Short interest also hit the year's high.
- Both funds are higher by just over 2% for the year (this doesn't included dividends).
- The outflows are rekindling old worries that ETFs could be the tail wagging the dog, i.e. that a liquidity crunch for the funds could trigger a need to sell paper, causing price declines, more outflows, more sales ...
- So far, at least, those concerns have proven to be overblown. Bid-ask spreads continue to narrow, and liquidity has remained robust even amid massive withdrawals - witness the easy functioning of the market when HYG was hit with $1B of outflows in early November.
- Source: Cecile Gutscher and Sid Verma at Bloomberg
- ETFs: HYG, JNK, HIX, DHY, HYLD, PHT, EAD, HYT, JQC, CIK, DSU, SJB, NHS, ACP, PHF, FHY, MCI
- Now read: 'I Told You So': A 'Crude' Awakening
Original article