The US high yield ETF, HYG, has seen its longest streak of outflows since September 2020 with over $3bn pulled out from the ETF in seven consecutive days. So far in 2022, almost $6.6bn has exited the ETF with the total AUM at $14.9bn. In terms of total returns, the ETF is down 5% YTD. Data from IHS Markit shows that short interest as a percentage of HYG shares outstanding is above 41%, indicating that bearish bets are near an all-time high. The exodus from the ETF comes after tightening by the Federal Reserve, geopolitical risks and a general softness in earnings, analysts mention. “We also probably need to see higher default rates realized, so that some bottom fishing can take place with conviction”, says Peter Chatwell, head of multi-asset strategy at Mizuho.

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