High Yield, Preferreds Soar

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 |  Includes: HYG, PFF
by: Bespoke Investment Group

As stocks continue to rally, two other asset classes that have been doing very well lately are junk bonds and preferreds. Below are six-month price charts of the high yield (junk) bond ETF (NYSEARCA:HYG) and the preferred stock ETF (NYSEARCA:PFF). As shown, both have basically gone parabolic over the last few weeks, making new 52-week highs on a daily basis.

Click to enlarge

Click to enlarge

While high yield bonds and preferreds have been on big runs higher for quite a while now, it may surprise some to know that they're still well below their highs from before the financial crisis. Below are long-term charts of both HYG and PFF since the two ETFs were created back in 2007. As shown, HYG needs to gain another 10% to get back to its pre-financial crisis high, while PFF needs to gain another 23%.

Click to enlarge

Click to enlarge