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Relentless Outflows Continue From Corporate Bond ETFs

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today looks at a return to risk assets, a continued flight from corporate bond funds, and yet another all-time low for volatility-linked products.

Assets quickly returned to SPY after a day or so of notable outflows, just in time for the anticipated FOMC rate decision this afternoon. We see SPY taking in more than $3.5 billion in new assets via creation lately as well as competing ETF IVV (iShares Core S&P 500) joining in, with over $2.6 billion during the same time frame.

On the flipside, as we have mentioned in the past several recaps, and it is worth repeating, redemption pressure has not abated in the High Yield Corporate Bond space. We see HYG (iShares HY Corporate Bond) leading all ETFs with over $1.4 billion flowing out of the fund and JNK (SPDR HY Bond) losing more than $1.1 billion during the past several trading sessions. Year-to-date, HYG has lost $2.7 billion in assets via redemption, while JNK has only net lost $750 million during this time period.

Also worth noting, XLV (SPDR Health Care) options have been very active earlier this week, with size activity in the April 77 calls (over 200,000 contracts traded).

Finally, even though the VIX was up nearly 8% yesterday, it has given up more than 4.8% in today’s session, and we note that “Long Volatility” ETPs such as VXX, UVXY, and TVIX are trading at new all-time lows yet again today — even though the VIX itself is not at an all-time low (a very familiar theme that our readers will note).

The iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) was trading at $86.52 per share on Wednesday afternoon, up $0.41 (+0.48%). Year-to-date, HYG has declined -0.03%, versus a 6.34% rise in the benchmark S&P 500 index during the same period.

HYG currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 36 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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