Seeking Alpha

High yield funds dip below key techinical level

  • Yesterday's decline coming on top of 4 consecutive weeks of losses brought the iShares High Yield Corporate Bond ETF (HYG +1%) and the Barclays High Yield Bond ETF (JNK +0.9%) below their 200-day moving averages, writes John Spence.
  • Combined, the two funds have seen more than $1B in outflows in August and they've also been underperforming similar-duration government bond funds like IEI, suggesting widening spreads in addition to higher rates.
  • Short-duration high-yield funds like Pimco's 0-5 Year (HYS +0.2%) and Barclays Short Term High Yield ETF (SJNK +0.4%) have gotten in favor with investors, but while they may protect from higher rates, they are as exposed to credit risk - and widening spreads - as their longer-duration cousins.
  • Related ETFs: HYG, JNK, PHB, HYLD, HYS, SJB, UJB, SJNK, ANGL, BSJG, BSJH, BSJI, QLTC, XOVR.
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