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Investors Are Hedging Their High Yield ETF Positions

Analyst Paul Weisbruch of Street One Financial brings investors his daily fund flows update, which today points out end-of-year market complacency as well as some hedging moves in a certain high-yield ETF.

Fund flows on both the creation and redemption side of the coin were extremely low yesterday, giving us literally nothing to speak about today that would be considered impactful or informative.

That said, it is likely all a direct reflection of the much lower than average trading volumes in the ETF marketplace in general that have occurred for the past two weeks, with funds like SPY (average daily volume of  more than 90 million shares) regularly trading in the 30-40 million share daily range this week.

Investors seem more focused on the rash of celebrity deaths than the markets heading into the final trading day of 2016, so we may not have anything terribly impactful to speak about in this column until sometime early next year.

In options activity, we did see some early 2017 hedging occur in the Fixed Income space via HYG (iShares HY Corporate Bond) January 85.50 puts, which implies about a 1% pullback there.

iShares iBoxx $ High Yid Corp Bond ETF (NYSE:HYG) was trading at $86.61 per share on Friday afternoon, up $0.09 (+0.10%). Year-to-date, HYG has gained 8.51%, versus an 11.00% rise in the benchmark S&P 500 index during the same period.

HYG currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #17 of 35 ETFs in the High Yield Bond ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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