Although HYG and JNK surely are not full representatives of an active managed HY/HI fund; I suggest those who hold such funds to continue to monitor the pricing actions based upon your risk/reward and your own forward thoughts about the global markets and any impact in this area of bond holdings.
The below link provides category listings you may choose to review for etf's in this area; as well as other major market sectors.
ETF DATA BASE LISTToday's price actions with both HYG and JNK are similar to actions about 10 days ago, finding a 1% drop in pricing. We may further reduce our holdings in this sector on Friday, if there is continued stress pricing with these issues; and in particular from further erosion in the overall equity markets as well. Other broadbased or multi-sector bond funds you hold may also reflect pricing from the HY sector, too. Some active managed bond funds may close today near flat, depending on the amount of IG bond holdings versus other higher risk bond types within the portfolio; with offsetting prices.
I note the above as a near normal pattern with HYG or JNK is about a 1/3 to 1/2% decline for a 1% decline in the overall U.S. equities markets. This has also been a pattern established over a longer time period, versus the past few weeks of the current pattern.
Lastly, you will find that HYG and JNK are now negative for the YTD. The majority of HY/HI active managed funds are positive 3-5% YTD, not including closing prices for today. While I will not argue the benefit of using etfs for moving in or out of sectors in a timely fashion; the YTD's of these etf's versus managed funds does indicate the ability of managers to "adjust" to a market place, as well as what to hold in a fund. I feel the recent pricing of the eft's in this area is from mood swings from big traders, which is also a benefit or danger, depending upon your buy or sell point of an etf. Not the least of considerations is the impact of the overall markets being reflected in "quality of credit".
NOTE: we have reduced our HY/HI holdings from about 34% of totals from a few weeks ago to about 10% as of today's numbers.
My 2 cents worth.
Be careful out there,
Catch
Comments
Thanks for the link; and it states what I do and have been watching for a reflection the equity markets, too.
Whether one is, or chooses to not invest in any bond funds; watching the various sectors may present some clues to directions for their own market place, as well as overall conditions which may be reflected in equity sectors. An exception today, that I forgot to note in the write is that the EM bonds area was slightly positive today. I expected a small down day.
Take care,
Catch