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So-called junk bonds are massively outperforming—but strategists now say they’re too risky

Hide out in high yield?

The great run for high-yielding corporate debt may be ending, some strategists argue.

The High Yield Corporate Bond ETF (HYG) has outpaced the 20+ Year Treasury Bond ETF (TLT) by more than 11 percent in the last three months, rising nearly 3 percent as the TLT got crushed after the U.S. election. High-yielding bonds are often called "junk bonds," as they carry higher risk of defaulting, along with low credit ratings.

As Erin Gibbs, equity chief investment officer at S&P Global, points out, a significant chunk of the HYG's 1,034 holdings are concentrated in communications; the fund's top-weighted constituents include Sprint, Western Digital and French telecommunications company SFR Group. Energy names are also highly represented in the fund.

"It's really concentrated, and you're just going to see a lot more volatility. It's not just all corporate debt; it's very concentrated in those two industries and you're going to see a lot of volatility," Gibbs said Wednesday on CNBC's "Trading Nation," adding that stabilized energy prices will make energy-related names in the HYG more attractive.

"And so [the HYG] has been doing well recently because it's coming off of lows, but in theory it should continue to go higher. You should get paid for taking on that additional risk in the HYG," she said.

High-yielding bonds may have gotten ahead of themselves, said Matt Maley, managing director and equity strategist at Miller Tabak. But he said they should continue their outperformance of the more stabilized Treasury market.

"The yield on the high-yield market is getting low, getting down near where it was in 2013, 2014 ... right before it saw a pullback. One was only a 7, 8 percent [pullback] but the other one was the big 20 percent correction, of course, when oil went down," Maley said Wednesday on CNBC's "Trading Nation."

"So I don't know if we get anywhere near that kind of pullback, but we could get a 5, 6 percent pullback at some point," Maley said, adding that estimate might even be high.