High-yield bonds, preferred stock, MLPs, convertible bonds and dividend stocks have tended to move with the general "risk-on, risk-off" trade. If stocks were heading higher, you'd see moderate capital appreciation in these vehicles, and when stocks headed lower, you would see moderate depreciation.
With the 10-year yield catapulting from 2.4% to 3.0% in a month's time, however, the spread between yield-oriented ETFs like
and Intermediate Bond ETFs have narrowed. Consequently, investors recalibrate the risk associated with higher-yielding assets.
Large Company, Small Company
With the exception of most real estate data, the U.S. economy has shown definitive signs of improvement. It follows that investors are choosing small- and mid-sized company ETFs that hold corporations which primarily serve the American public.
Most small- and mid-sized ETFs have already hit fresh 52-week highs. Meanwhile, large corporations derive a huge chunk of revenue and profits from overseas operations. At present, the weakening of the euro and the slow growth of the EU economic region act as tailwinds to Large-Cap ETFs. The overwhelming majority of Dividend ETFs focus on long-standing, "been-around-forever," large corporations.
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