According to a July survey conducted by VettaFi and State Street Global Advisors, high yield credit strategies were the bond style most appealing for advisors to add to client portfolios. With treasury yields narrowing and the Federal Reserve aggressively hiking rates to tackle inflation, investors are looking to take on more credit risk to receive higher yields. This is evident as three top high yield corporate bond ETFs, that collectively manage $44 billion, pulled in $4.7 billion in flows during July. The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) brought $1.9 billion in new assets during July, while the SPDR Bloomberg High Yield Bond ETF (JNK) and the iShares Broad USD High Yield Corporate Bond ETF (USHY) brought in $1.7 billion and $1.1 billion, respectively. It appears that investors currently prefer high yield bond ETFs with higher risk profiles to funds that offer more protection against rising rates.
Finsum: Due to the Fed’s rising rates policy and narrowing yields, investors flocked to high-yield bond ETFs last month.