High yield exchange traded funds are reflecting investors’ growing concerns over the fixed income space, with short interest in these vehicle reaching a new record in February, according to data from IHS Markit.
high yield ETFs
Investors have piled out of high-yield bond ETFs after a slight downturn in performance and analysts’ warnings of a rally in this asset class that was bordering on “euphoria”.
High yield ETFs have been experiencing substantial outflows over recent weeks, as investors’ attitudes towards riskier bonds have cooled following a setback in the asset class’s performance.
US investors are dipping their toes back into European and emerging markets and even high-yield bonds as domestic rally slows and post-Brexit trade appeals.
Emerging market equity and commodity ETPs saw inflows following the Federal Reserve’s decision last week to raise interest rates once again, despite these areas of the market being traditionally considered interest rate sensitive and often suffering redemptions around rate hikes.
European equity ETFs suffered renewed outflows in the month following Brexit, despite a reversal of this trend in June, the month when the referendum took place, as spooked investors rushed to take money out of Europe.