There are over 300 Fixed Income ETF’s, of which there are only thirteen with market caps over $10 billion. But there is only one Fixed Income ETF with short interest over $5 billion – the Ishares iBoxx $ High Yield Corporate Bond ETF (HYG US), which just climbed over $5.1 billion in short interest today.
The HYG ETF has been a very active short for the last several years averaging $2.6 billion in 2014 and $2.1 billion in 2015. HYG short interest broke through the $3 billion level for only the third time historically in May of this year and never looked back. The last two times HYG short interest was over $3 billion were also in May - May 2015 and March-May 2014.
Short sellers continued to build their positions during the summer and reached $3.3 billion, up 53% year to date, by the end of July. August saw an acceleration in short selling, with almost $1.8 billion of new short activity in the month. Short interest has grown to $5.1 billion, up 134% for the year and 51% since the 2nd quarter.
Short sellers were not the only traders with a negative outlook on HYG, long holders were also pessimistic on the ETF in the 3rd quarter with over $750 million of net outflows in the ETF.
For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC Ihor.Dusaniwsky@S3Partners.net
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