The negative news about high yield bond ETFs continues. The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) in February 2013 joined the list of most-shorted ETFs.
According to IndexUniverse, the number of shares shorted on HYG last month spiked 52 percent, with the $15-billion fund making its first appearance on the Top 10 list of the biggest shorts in the ETF market.
The next few months may bring greater clarity to the world of high yield bonds. In the meantime, investors who don't own any high yield ETFs, but who do own investment grade and core bond ETFs might wish to take a closer look at their holdings to check the extent of their high yield bond coverage.
No big surprises in the listing below, but the percentage of high yield is something to be aware of. If you're a contrarian and are contemplating a high
Institutional money managers, financial advisors, and investors of all walks of life have largely embraced the advantages offered by the exchange-traded product structure over traditional mutual funds. The rising popularity of indexing strategies makes it easy and affordable for investors to tap into virtually any asset class around the globe through the purchase of a single ticker. Thanks to the ongoing innovation in the ETF universe, investors don't have to settle for a passive strategy; in fact, increasing cost competition among issuers has led to lower prices for both passive and actively managed funds, allowing for investors to tap into a diverse suite of strategies without incurring astronomical expenses.
Cost efficiency is one of the founding pillars of the ETF industry, and as such, the exchange-traded product structure continues to evolve into a more affordable investment vehicle. Cost-conscious investors have several dozen "cheap" ETFs with rock bottom expense ratios to
Monetary policy has been super "accommodative," as the technical term goes. Yes, this is in response to an unprecedented economic crisis and an overhang of debtors with severely damaged balance sheets. Yet, this policy isn't without critics. Three important (ex) central bankers let their voices be heard recently. Here is an overview of some of the arguments (which hardly came from those three bankers, as it happens. But we looked beyond their criticism).
How did we get here?This is important to realize as Fed policy might not be the most important reason we have such low interest rates. In essence, we had a credit bubble bursting, which wiped out $9 trillion from household balance sheets (mostly via a fall in house prices) while leaving much of the associated debt in place.
In reaction, households started to save more and borrow and spend less, which got the economy in