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PIMCO 0-5 Year High Yield Corporate Bond Index ETF (HYS)

- NYSEARCA
  • Apr. 22, 2014, 11:55 AM
    • Maybe surprising to many, long-dated investment-grade corporate bonds are outperforming junk bonds this year, with total returns already of 7.48% vs. junk at 3.3%. It's a turnaround from 2013, when high-yield returned 7.42% vs. a loss of 1.57% for IG paper.
    • It's good news for institutional investors like pension funds and insurers, who have been big buyers of the bonds in recent months.
    • Investment-grade corporate debt ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, IGS, CBND, IGU, QLTB
    • In other junk bond news, DoubleLine's Bonnie Baha says the firm's core fund has cut its high-yield exposure to 3% from 6%. High prices are the reason, says Baha, noting the average price of 104.5 cents on the dollar. Many issuers can force redemptions at 103 cents, and if they don't get called, in a low-rate environment there's extension risk.
    • Baha takes note of the proliferation of short-duration high-yield funds. "It's a fallacy to think that just because it’s short-term that bad things can’t happen."
    • High-yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, YPRO, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
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  • Apr. 16, 2014, 11:11 AM
    • At 1.7% at the end of Q1, the U.S. junk bond default rate is off from 2.2% at the end of 2013, and at the lowest level since February 2008, according to Moody's. With the market yielding an average of just 5.2% (prior to 2012 it had never been below 6.5%), the default rate better stay low.
    • Moody's sees the default rate rising to 2.4% by year's end and 2.7% one year from now - both still well below the 20-year average of 4.5%.
    • It's not necessarily a booming economy, but instead welcoming debt markets which allow low-rated issuers to refinance at extended maturities and lower rates.
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, BSJH, UJB, XOVR, THHY, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
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  • Apr. 10, 2014, 10:39 AM
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  • Apr. 8, 2014, 2:51 PM
    • "There are segments of the high-yield market that do not compensate you for the risk you are taking by owning them," says BlackRock portfolio manager Michael Fredericks. Average spreads to Treasurys have fallen to just 352 basis points, the lowest since prior to the financial crisis.
    • There's still value, insist some managers, you just have to know where to look. "The game has changed in the high-yield market and it has become more sophisticated than it was two or three years ago," says another fund manager. Barclays chief of credit strategy Brad Rogoff, for instance, is spotting value in the high-yield paper sold by mining and retail companies, as well as the dollar-denominated bonds sold by European companies. The so-called "yankees" are on average cheaper than the boarder market, he says.
    • Another option is that of emerging market high-yield debt, with average yields of 7.6% more than 200 basis points higher than that of U.S. paper.
    • Related ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, IHY, EMHY, HYEM, BSJI, HYXU, ANGL, PGHY, HYLS, XOVR, UJB, BSJH, THHY, IJNK, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
    | 2 Comments
  • Mar. 31, 2014, 7:53 AM
    • After pouring money into U.S. Treasury ETFs in the first two months of the year, investors pulled $10.3B in March, the largest amount withdrawn since December 2010, according to Bloomberg. The $7.86B iShares 1-3 Year Treasury Bond ETF (SHY) is the leader on a percentage basis - losing one-third of its AUM this month.
    • The catalyst is clearly the FOMC's signal on rate hikes beginning in about a year. “When the market thinks the Fed is going to raise rates, they don’t tend to stick around in short-dated bonds,” says global macro strategist Thomas Higgins.
    • Short-duration Treasury ETFs: SHY, BIL, SHV, VGSH, SCHO, DTUL, SST, DTUS, TUZ
    • In other areas of fixed income, inflation--linked bond ETFs had their first inflows in 19 months, and investors continue to plow money in high-yield.
    • TIPs and junk ETFs: HYG, JNK, TIP, HYLD, HYS, SJNK, PHB, VTIP, IPE, SCHP, SJB, STPZ, LTPZ, TIPZ, HYHG, STIP, ANGL, HYLS, XOVR, THHY, UJB, TPS, SHYG, QLTC, TDTT, TIPX, HYZD, TDTF, HYND, SIPE
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  • Mar. 12, 2014, 2:56 PM
    • The average covenant-quality score for high-yield bonds deteriorated to 4.36 in February from 3.84 one month previous (ranking is from 1 to 5, with 5 the weakest). It's the lowest print since Moody's began tracking the gauge in January 2011.
    • The decline was driven by a near-record percentage of high-yield-lite bonds - 39% of issuance in February vs. just 10% in January. “These bonds lack a debt incurrence and/or a restricted payments covenant and automatically receive our weakest score of 5.0," says Moody's Evan Friedman.
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
    | Comment!
  • Mar. 12, 2014, 8:42 AM
    • "There's no way for prices to go up at this point," says Jeff Gundlach of the junk bond market. The average junk bond yields just 5.3% and trades above 104 cents on the dollar, he says, higher than the 103 level at which many bonds can be called by their issuers.
    • “If a bond is priced to call, and rates rise, it might not get called. People may think they own a short-term portfolio but if interest rates rise it might turn into a 10-year bond instead. It would also roll up the yield curve ... This could be a debacle."
    • I’m not worried as much about interest rate risk and credit risk ... I’m worried more about liquidity risk and naively owned positions."
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
    | 1 Comment
  • Mar. 11, 2014, 1:37 PM
    • High-yield investors should take little comfort from a low default rate (with most forecasting for that to continue), says Martin Fridson, reminding the default rate in 2007 was 0.975%, but junk suffered a 5.6% price drop that year.
    • The commonly held belief that high-yield total return equals yield minus default loss is "essentially irrelevant over a one-year horizon" in that it assumes the bonds which default in any given year began the year at par. In truth, the vast majority of any year's defaults began the year as distressed paper with spreads to Treasurys of 1K basis points or more.
    • "Investors are ill-served by overly simplistic analysis implying that mid-double-digit returns are a sure thing as long as the default rate remains below average.  The high-yield market has proven that it is quite capable of generating substantial price declines even in the face of extremely low default rates and declining Treasury yields."
    • Yesterday: Junk-bond default rate slides to just 1.6%.
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, HYEM, IHY, EMHY, BSJI, HYXU, ANGL, PGHY, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND
    | Comment!
  • Mar. 10, 2014, 1:01 PM
    • February's 1.6% is off from an already-low 1.9% in January, but Moody's see it rising to 2.3% by year's end. The historical average since 1983 is 4.7%. Globally, the default rate fell to 2.4% in February from 2.6% previously, and Moody's sees a further decline this year to 2.1%.
    • The default rate better stay low - the junk market yields just 5.34% on average and the spread to Treasurys is 379 basis points per the BAML benchmark index, right near a post-crisis low.
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, SJB, HYHG, IHY, HYXU, ANGL, PGHY, HYLS, XOVR, THHY, UJB, QLTC, SHYG, HYZD, HYND
    | Comment!
  • Mar. 3, 2014, 12:32 PM
    • Even though junk bonds entered 2014 sporting puny yields, they've continued to fly through the end of February, returning 2.76%. The average yield is now just 5.2% - 40 basis points below where is started the year - and the average spread to Treasurys has dipped to a post-crisis low of 3.81%.
    • "This can't go on forever," says Barron's Michael Aneiro (not the first time he's sounded a warning). "This all depends on ultra-low interest rates, which allow junk-rated companies to refinance their debts indefinitely while pushing investors into riskier types of bonds."
    • The two most popular ETFs, HYG and JNK are relatively unscathed on this risk-off day, -0.1% and 0.3%, respectively.
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, SJB, HYHG, ANGL, XOVR, HYLS, THHY, UJB, SHYG, QLTC, HYZD, HYND
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  • Feb. 12, 2014, 4:50 PM
    | 3 Comments
  • Jan. 31, 2014, 2:58 PM
    • Junk bonds are torn between the slide in Treasury yields (good for prices) and a stumbling stock market (not good), and they've split the difference thus far this year - both HYG and JNK are about flat.
    • "High yield has held up relatively well amid the recent emerging market-driven volatility," say Barclays credit strategists Brad Rogoff and Jeff Meli, with the rally in rates acting as a "stabilizer" amid the volatility of the selloff in risk assets. "Fund flows, which had been mixed in the past few weeks, have turned to moderate but manageable outflows."
    • High-yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, HYHG, BSJG, BSJI, ANGL, HYLS, XOVR, UJB, BSJH, THHY, QLTC, SHYG, BSJK, HYZD, HYND, BSJJ
    | 1 Comment
  • Jan. 27, 2014, 9:55 AM
    • A trio of closed-end funds selling at discounts to NAV get early boosts after Bill Gross recommends them at the Barron's Roundtable over the weekend.
    • The Pimco Dynamic Income Fund (PDI +2.1%) launched in May 2012 near the low in interest rates, but is still 20% higher today, in addition to making hefty payouts. One of the managers is Daniel Ivascyn who was just elevated to Pimco's deputy CIO after the resignation of Mohamed El-Erian. Magazine cover indicator types will want to know Ivascyn was just named to Morningstar's Fixed Income Managers of the Year.
    • PDI yields 7.85%, but a special dividend boosted 2013's return to 12%. It is slightly levered and invests in nonagency MBS. "The fund could have a lot of firepower if the housing market holds up."
    • For those with interest in tax-free income, Gross suggests the Pimco Municipal Income Fund II (PML +1.5%), trading at a slight discount to NAV and holding no debt of Puerto Rico or Detroit.
    • Selling at an 8% discount to NAV at last check is the Reaves Utility Income Fund (UTG +1.2%).
    • For high yield debt, Gross suggests an ETF, the Pimco 0-5 Year High-Yield Corporate Bond Index (HYS +0.1%) - the shorter duration should limit risk if spreads widen.
    | 3 Comments
  • Jan. 8, 2014, 2:28 PM
    • With 3 years of trading and over $470 million assets under management, the AdvisorShares Peritus High Yield ETF (NYSEARCA:HYLD) now has a new reason for investor consideration: the coveted 5-star rating from Morningstar.
    • This rating means that HYLD was in the 10% of high yield bond ETFs and mutual funds; applying to the fund's overall and annual performance.
    • "We appreciate Morningstar's 5-star recognition of HYLD and believe this acknowledgment reinforces that active management is essential in the high yield market," said Tim Gramatovich, chief investment officer of Peritus, the fund management group.
    • Other high yield bond ETFs: HYG, JNK, HYS, SJNK, PHB, SJB, HYHG, ANGL, HYLS, UJB, XOVR, THHY, QLTC, SHYG, HYZD, HYND
    | 5 Comments
  • Dec. 19, 2013, 10:20 AM
    • The WisdomTree (WETF) Barclays U.S. Aggregate Bond Zero Duration Fund (AGZD) has a 0.23% expense ratio, and the U.S. Aggregate Bond Bond Negative Duration Fund (AGND) has expenses of 0.28%.
    • The WisdomTree BofA Merrill Lynch High Yield Bond Zero Duration Fund (HYZD) has a 0.43% expense ratio, and the High Yield Bond Negative Duration Fund (HYND) costs 0.48%.
    • Also launched is a play on rising rates in Japan, the WisdomTree Japan Interest Rate Strategy Fund (JGBB) which is set up to short JGBs while hedging with a long position in U.S. T-bills. The fund will also partially hedge against changes in the yen's value. The expense ratio is 0.5%.
    • Press release
    • Broad fixed income ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GVI, GBF, MINC, FWDB, GIY
    • High yield ETFs:  HYG, JNK, HYS, HYLD, SJNK, PHB, SJB, ANGL, UJB, XOVR, QLTC, SHYG
    • JGB ETFs: JGBS, JGBD, JGBL, JGBT
    | Comment!
  • Dec. 13, 2013, 3:00 PM
    • "Total returns of high yield bonds will be under pressure in 2014 as rates are likely to drift upwards, and further compression of credit spreads to pre-2007 levels is unlikely given increased price volatility from rates, reduced secondary market liquidity, and lower demand from CDOs," says Barclays. The team notes high yield credit spreads briefly widened to 100 basis points this spring, but have since returned to the YTD lows (of around 60 bps), leaving little room for further improvement.
    • Maybe the best way to profit from a high yield ETF (HYG) not seen going higher in price anytime soon is to sell calls against it suggests the team, noting implied volatility remains elevated even as spreads have normalized back to pre-taper levels.
    • Junk ETFs: HYG, JNK, HYS, HYLD, SJNK, PHB, SJB, ANGL, XOVR, UJB, QLTC, SHYG
    | Comment!
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HYS Description
The Fund seeks to provide total return that closely corresponds,before fees and expenses, to the total return of The BofA Merrill Lynch 0-5 Year US High Yield Constrained IndexSM*.
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Country: United States
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