Is Poor Performance Of Junk Bonds A Red Flag For Investors?
Chris Kimble | Sep 01, 2021 04:41PM ET
2021 has been a great year for equity investors.
The Nasdaq 100 and S&P 500 ETFs are up between 20% and 25% on the year!
But while it’s felt like a risk-on kinda year, there’s been one missing ingredient: Junk bonds.
Something Isn’t Quite Right
In today’s chart, we look at the year-to-date performance of key stock market indices versus the popular junk bond ETF (SPDR® Bloomberg Barclays High Yield Bond ETF (NYSE:JNK). As you can see, junk bonds are lagging badly the broader market.
Typically, junk bonds are a strong performer in a “risk-on” environment for investors. So perhaps the stock market isn’t quite as stable here as thought. And maybe a little mean reversion is coming around the bend. Stay tuned.
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