High yield outperforms investment grade credit

HHigh-yield credit outperformed investment-grade credit for the week ending May 6 at a time when markets were experiencing significant volatility, according to BondBloxx Investment Management co-founder and CIO Elya Schwartzman in a weekly market update. US credit markets. Spot high yield credit markets returned -1.2% last week as spreads widened more than 25 basis points. In fact, high-yield cash credit markets were initially subdued as investors sold stocks amid inflation fears.

As stocks posted their biggest one-day decline in two years, falling nearly 4% on May 5, Markit’s high-yield North American CDX index widened more than 30 basis points at 460, a level not seen since July 2020.

In line with market sentiment, riskier CCCs returned -2%, while BBs returned -1%.

While most high-yielding sectors posted returns of around -1%, healthcare posted a -2% return. Investment grade and emerging market yield spreads were flat, up one and six basis points, respectively, with the -1.5% return almost entirely driven by rates. Index declines for the week were less drastic in shorter dated credit, such as 1-10 year EMDs, which returned -0.9% vs -2.4% for emerging markets at long duration.

Returns as of May 6, 2022
Source: Ice Data Services; JP Morgan; IHS Markit, Bloomberg, TRACE, BondBloxx.

In February, BondBloxx launched seven high-yield US bond ETFs that provide precise index exposure to the high-yield asset class and allow investors to diversify and manage industrial sector risk. The funds are passively managed and track rules-based sub-indices of the ICE BofA US Cash Pay High Yield Constrained Index.

BondBloxx was founded by ETF industry leaders Leland Clemons, Joanna Gallegos, Elya Schwartzman, Mark Miller, Brian O’Donnell and Tony Kelly. The team has collectively built and launched over 350 ETFs in companies including BlackRock, JPMorgan, State Street, Northern Trust and HSBC.

According to the issuer, more and more institutional investors recognize the role that bond ETFs can play in their portfolios, even in times of volatility. They can offer short-term liquidity as well as a more efficient way to keep portfolios balanced. Sector ETFs make it possible to add intentional tactical inclinations to their portfolios. They can also improve price discovery, even when transparency is low or the underlying securities are not trading.

“One of our goals at BondBloxx is to educate the market about the variation in yields in credit markets,” Schwartzman said. “An important but unrecognized source of outperformance for investors is the dispersion of returns within broader categories of the bond market, particularly in times of market dislocation.”

For more news, insights and strategy visit the Institutional Income Strategies Channel.

Learn more at

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.


"Writer. Coffee practitioner. Twitter specialist. Food trailblazer. Subtly charming analyst. Troublemaker. Unable to type with boxing gloves on."
Back to top button