High Yield Bond ETFs: InFlows “Off the Wall”

In a column filed through SFGate, Bloomberg LP’s Joe Ciolli reports, “Junk Bond ETFs are drawing the biggest inflows on record from investors seeking easier access to higher-yielding assets. According to Lipper Analytics, ETFs that track junk-bond indexes have tapped $5.5 billion of investments since the beginning of this year, almost quadruple the $1.4billion during the same period of 2011.

While exchange-traded funds comprise 2 percent of the $1 trillion in U.S. corporate speculative-grade debt outstanding, they accounted for more than a third of the total $14.8 billion of inflows this year into mutual funds and ETFs that buy junk bonds.

The use of ETFs makes the market more efficient than investing in mutual funds because they trade throughout the day and give investors a “more appropriate way to tactically approach high-yield,” said Jeff Tjornehoj, head of Americas research at Denver-based Lipper, whose parent company, Thomson Reuters Corp., competes with Bloomberg LP for financial news and information.

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