Redemption And Reality In High-Yield ETFs

Thu, 05/24/2012 - 15:34 EDT - Seeking Alpha

By iShares ETFs: The high yield bond market is back in the news again. On the back of increased concerns over the events in Europe there has been an increase in high yield market volatility over the past few weeks. Investors have seen this in the price movements of HYG, the iShares iBoxx High Yield Bond ETF. Of particular focus has been a series of redemptions out of HYG and other high yield ETFs. These trades have been at times misunderstood by market participants, so I’m going to try to provide some clarity. First off, it’s important to remember that HYG, just like all other iShares ETFs, has a process by which shares can be created and redeemed in large quantities on a daily basis (see a video explaining this concept here). So if investors are leaving the high yield bond market and selling shares of HYG, this may result in shares ofComplete Story »

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Redemption And Reality In High-Yield ETFs

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