Biggest Junk-Bond ETF Attracts Most Cash Since 2020 as Rally Builds

Investors are piling cash into the largest junk bond exchange-traded fund at the quickest pace in nearly three years amid a broad rebound in risk assets.

More than $2 billion flooded into the $17 billion iShares iBoxx High Yield Corporate Bond ETF (ticker HYG) last week, according to data compiled by Bloomberg. That was the biggest haul among fixed-income ETFs and the HYG’s largest weekly influx since November 2020.

The renewed appetite for HYG — which had been sitting on net outflows of nearly $1.2 billion prior to last week — arrives even though there have been several high-profile warnings about a coming wave of defaults and rating downgrades. Despite the red flags, a series of strong economic prints such as Friday’s blockbuster May jobs report may have convinced investors that it’s safe to venture back into riskier credits, according to Wells Fargo Investment Institute’s Sameer Samana.

“One possible bull case is that the economy remains resilient today and investors may not need to worry about the recession until later this year,” said Samana, the firm’s senior global market strategist. “To us, that’s akin to picking up pennies in front of a bulldozer.”

HYG's Biggest Haul Since 2023 | Junk bond ETF attracts most cash in three years