The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Accessed May 20, 2020. Accessed May 20, 2020. Dividend Yield: 6.9%. Best High-Yield Funds for 2019: iShares iBoxx $ High-Yield Corporate Bond ETF (HYG) 12-Month Yield: 5.3% Expenses: 0.49% If you want to add one of the most widely traded high-yield … Investors who are interested in higher current income and have a high tolerance for risk are best suited for this particular industry. Underlying Holdings: Underlying Holding data shows the direct investments of the iShares Global High Yield Corp Bond UCITS ETF, the underlying fund into which the fund substantially invests. Todd Rosenbluth, director of … Compare the best Bond ETFs 2020 at a glance. A fallen angel is a bond that had an investment-grade rating but has been reduced to junk bond status due to the issuer's weakened condition. If choosing to invest in high-yield ETFs, such as the ones we have highlighted, it's important to weigh what we like about them against what we don't like. High-yield bonds, as measured by the Bloomberg Barclays U.S. Corporate High Yield Bond Index, have underperformed the broader market. Investors have more opportunity to find yield in a variety of ways, which often leads to higher yields because of specialization within the ETF market. Managers are not able to navigate unfavorable market conditions by trading or holding at their discretion. The fund management team attempts to find and hold the highest paying dividend stocks available in emerging markets. He is a Certified Financial Planner, investment advisor, and writer. ETFdb.com. Past performance is not indicative of future results. Their year-to-date (YTD) returns range from … VanEck. IQ S&P High Yield Low Volatility Bond ETF Morningstar Risk-Adjusted Ratings: US Fund High Yield Bond Category - Class Shares Overall Rating 4 stars out of 625 funds, 3 Year 4 stars out of 625 funds, 5 Year 0 stars out of 541 funds, 10 Year0 stars out of 349 funds. Take a look at HYD if you have a taxable account and you're looking for a high-yield ETF. SPDR Barclays High Yield Bond ETF (JNK) 7. Accessed May 20, 2020. The offers that appear in this table are from partnerships from which Investopedia receives compensation. U.S. Securities and Exchange Commission. Once the 0.62% management fee is subtracted, investors are left with a substantial 5.71%. A Beginner Investor's Guide to Understanding Dividend Yield, You Only Need These 7 Vanguard ETFs to Build a Complete Portfolio, iShares iBoxx $ High-Yield Corporate Bond (HYG), SPDR Bloomberg Barclays High-Yield Bond (JNK), VanEck Vectors High-Yield Municipal Index (HYD), WisdomTree Emerging Markets High Dividend Fund (DEM), SPDR Dow Jones International Real Estate (RWX), First Trust Preferred Securities and Income (FPE), Invesco KBW High Dividend Yield Financial Portfolio (KBWD), Vanguard Emerging Markets Government Bond (VWOB), iShares iBoxx $ High Yield Corporate Bond ETF, SPDR Bloomberg Barclays High Yield Bond ETF, HYD VanEck Vectors High-Yield Municipal Index ETF, Investor Bulletin: Real Estate Investment Trusts (REITs), SPDR Dow Jones International Real Estate ETF, First Trust Preferred Securities and Income ETF (FPE), Invesco KBW High Dividend Yield Financial ETF, Vanguard Emerging Markets Government Bond ETF (VWOB). The maturities average at intermediate-term, which is generally between three and 10 years., Investors who want income through a low-cost ETF that holds dividend stocks should like VYM. Accessed Nov. 17, 2020. These high-yield bonds also are called junk bonds. This income can be received in the form of dividends from stocks, or by interest payments from bonds. Currently, the best performing index with 32.92% is the Refinitiv Qualified Global Convertible. Accessed May 20, 2020. Junk bonds are debt securities rated poorly by credit agencies, making them higher risk (and higher yielding) than investment grade debt. WisdomTree Negative Duration High Yield Bond ETF (NasdaqGM: … ETFdb.com. Fidelity. Investors should keep in mind that high-yield funds often invest in bonds with low credit quality. REITs usually have at least 100 shareholders, and they're legally required to pay out at least 90% of their income to shareholders., RWX tracks the Dow Jones Global ex-U.S. Peritus High Yield ETF (HYLD) is another example of how a yield chase can lead an ETF into low quality and underperformance. Are the Best Bond ETFs for Q3 2020in their respective categories assuming an Intermediate Time Horizon with 5 to 10 year duration and generating the highest Yields. "BofA Merrill Lynch US Fallen Angel High Yield Index – ETF Tracker." All figures are as … The fund tracks the Bloomberg Barclays USD Emerging Markets Government RIC Capped Index, which consists of about 1,000 emerging markets bonds with an average duration of 6.4 years and credit quality mostly below investment grade. The Best Bond ETFs These fixed-income-focused exchange-traded funds all earn Gold ratings. "Emerging Markets High Dividend Fund." When interest rates are rising, bond prices are generally falling, and the longer the maturity, the greater the sensitivity. Fallen Angels USD Bond ETF . Investing in real estate with REIT sector funds can be a good way to get high yields for income purposes. The Balance does not provide tax, investment, or financial services and advice. High risk because of associated junk bonds. iShares Broad USD High Yield Corp Bd ETF. 5. iShares iBoxx $ High Yield Corporate Bond ETF (HYG) 6. ZHY bonds’ yield to maturity is 6.33% (as of May 24). MLP funds invest in master limited partnerships, which typically focus on energy-related industries. “The Drawbacks of ETFs.” Accessed April 1, 2020. iShares. SS&C Alps Advisors. Invesco Senior Loan (BKLN) 8. iShares Broad USD High Yield Corporate Bond ETF; Best Corporate Bond ETFs. Another common argument in favour of high-yield bond ETFs is diversification. The largest Junk Bond ETF is the iShares iBoxx USD High Yield Corporate Bond ETF HYG with $25.93B in assets. ”Snapshot: JNK.” Accessed May 20, 2020. Accessed May 20, 2020. Invesco. Select Real Estate Securities Index, which consists of non-U.S. REITs and other real estate securities. We examine the 3 best high-yield bond ETFs below. This disadvantage also exists with index mutual funds. Accessed May 20, 2020. Kent Thune is the mutual funds and investing expert at The Balance. The best-performing high-yield bond ETF, based on performance over the past year, is the iShares U.S. State Street Global Advisors. All numbers below are as of November 17, 2020., FALN focuses on high-yield bonds across all durations and from developed markets. Investing involves risk including the possible loss of principal. It's got a 12-month yield of 4.38% and charges a … Accessed May 20, 2020. … HYG tracks the Markit iBoxx USD High Liquid Index. Bond Index, which uses a trend-following strategy to alternate exposure between the S&P U.S. High Yield Corporate Bond Index and the S&P U.S. Treasury Bond 7-10 Year Index. Unlike the other two funds above, this ETF is neither primarily focused on fallen angels nor on high-yield bonds. The expense ratio is 0.85%, which is low for an MLP fund., Investors looking to diversify their high-yield holdings with foreign stocks, specifically emerging markets, might want to check out DEM. In the last trailing year, the best performing Junk Bond ETF was the FALN at 15.48%. One of the things that makes high-yield bond ETFs popular is their high income. Whether you're investing in high-yield mutual funds or high-yield ETFs, it's smart to have a clear purpose in mind for buying these income-oriented investments. AAA is the highest. "PACER TRENDPILOT® US BOND INDEX," Page 3. A floating rate fund invests in bonds and debt instruments whose interest payments fluctuate with an underlying interest rate level. ETFdb.com. State Street Global Advisors. We also reference original research from other reputable publishers where appropriate. A floating rate fund is a fund that invests in financial instruments paying a variable or floating interest rate. Peritus High Yield ETF (HYLD), 1.35% PIMCO Global Advantage Inflation-Linked Bond Strategy Fund (ILB), 0.60% WisdomTree Emerging Markets Corporate Bond Fund (EMCB), 0.60% BulletShares® High Yield ETFs The values of junk bonds fluctuate more than those of high quality bonds and can decline significantly over short time periods. Transactions in shares of ETFs may result in brokerage commissions and will generate tax consequences. The expense ratio is 0.63%.. "HYD VanEck Vectors High-Yield Municipal Index ETF." The Analyst Rating for Funds is based on our fund analysts’ conviction in a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. Accessed Nov. 17, 2020. "First Trust Preferred Securities and Income ETF (FPE)." 9. iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) 10. This high-yield ETF from Invesco is based on the KBW Nasdaq Financial Sector Dividend Yield Index, which consists of financial industry stocks that are known for their consistent dividends. The SEC Yield is 6.25% as of May 2020, and the expense ratio is 0.49% or $49 for every $10,000 invested., Another highly traded ETF that invests in high-yield bonds is JNK, which had an SEC Yield of 6.85% as of May 2020 and an expense ratio of 0.40%. As the ticker symbol suggests, JNK invests in bonds with credit quality below investment grade. The management team looks for income securities, such as corporate bonds at or below investment grade, preferred stocks, and convertible securities. "Vanguard High Dividend Yield ETF (VYM)." Susan Dziubinski. The top holdings of FALN include high-yield bonds for Carnival Corp. (CCL), a British-American cruise operator; and high-yield bonds of two different sets of maturities for Sprint Capital Corp., a wireless telecommunications company, which was recently acquired by T-Mobile., ANGL tracks the BofA Merrill Lynch U.S. What Are Junk Bonds and How are Junk Bonds Rated? In the final months of each Fund's operation, its portfolio will transition to cash and cash-like instruments. One high-yield municipal bond ETF to consider is the SPDR Nuveen S&P High Yield Muni Bond ETF (NYSEMKT:HYMB). Pacer ETFs. 10 High-Yield ETFs That Stand Above the Rest, High-Yield ETFs vs. Fallen Angels USD Bond ETF." WisdomTree. HYG was the first high-yield corporate bond fund, and it tracks a market-weighted index of U.S. high-yield corporate debt. Long-term investors typically look for growth in their portfolios over time, and most investors seeking high-yield funds are retired investors looking for income from their investments. This tax advantage can be especially attractive to investors in high tax brackets, which would translate into a high tax-effective yield. Bond rating agencies are companies that assess the creditworthiness of both debt securities and their issuers. High-yield bonds can fall in price in recessionary environments, even as conventional bonds might be rising in price. The following table lists the top 100 exchange-traded funds with the highest dividend … The fund employs a strategy that increases exposure to high-yield bonds only when those bonds are trending up, and lessens its exposure by shifting to U.S. Treasurys when they are trending down. Its top three holdings are high-yield bonds issued by Ford Motor Co. (F), an automobile manufacturer; United States Cellular Corp. (USM), a provider of wireless telecommunications services; and M.D.C. Holdings Inc. (MDH), a homebuilder and originator of mortgage loans.. Accessed Nov. 17, 2020. Vanguard High-Yield Corporate Investor (VWEHX, $5.94), another Kip 25 selection, is one of the best bond funds for retirement investors who are seeking higher levels of … Can Bond ETFs lose money? Like FALN, it focuses on fallen angel bonds. While these bonds are higher risk than investment-grade alternatives, this particular fund tends to hold bonds concentrated at the higher end of the credit quality spectrum, including some bonds which may eventually be upgraded back to investment grade. Here are the best High Yield Bond ETFs. Here are three of the best-performing high-yield bond ETFs thus far this year. There are 41 distinct high-yield bond ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). Investopedia requires writers to use primary sources to support their work. "iShares U.S. "SPDR Dow Jones International Real Estate ETF." "Financial Data." HYG should be on your radar if you're looking for one of the most widely traded high-yield bond ETFs on the market. MLP performance can be volatile, and their structure as partnerships is more complex than stocks. "PTBD – PACER TRENDPILOT® US BOND ETF." YCharts. Accessed Nov. 17, 2020. "Alerian MLP ETF." How Floating Rate Funds Can Offer Yields in a Rising Rate Market, iShares U.S. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years. Choosing the best high-yield bond ETF involves consideration of risk and volatility, analysis of technical aspects like fees and projected yields, and the process of matching a specific ETF with a concrete investing strategy. High yields are attractive for income purposes, but the market risk on these bonds is similar to that of stocks. Best High-Yield Bond Funds: iShares iBoxx $ High Yield Corporate Bond ETF (HYG) Expense Ratio: 0.49% Among bond funds, some of the largest are … This ETF tracks the FTSE High Dividend Yield Index, which consists of about 400 stocks of mostly large-cap companies that pay above-average dividends to investors. For investors seeking the best-performing high-yield bond ETFs, here are 10 to consider. High-Yield Mutual Funds, Use Caution When Investing in High-Yield Funds, These Bond Funds Are the Best for High Yield Investing, These Types of ETFs Are Best for Roth IRAs, Consider Floating-Rate Bonds as an Investment, A List of the Top Dividend Funds for All Stages of an Investor's Life, The Best Mutual Funds and ETFs That Invest in Health Stocks, Find Out About ETF Investing Strategies to Diversify Your Portfolio, These Fidelity Funds Produce High Dividends, These Are the Best Types of Funds for 401(k) Plans. First Trust. Accessed Nov. 17, 2020. ETFdb.com. Discover more about them here. A high-yield, or "junk" bond has a lower credit rating and thus pays a higher yield due to having more risk than higher rated bonds. Goldman Sachs Access Hi Yld Corp Bd ETF. Dec 8, 2020 ... such as corporate high-yield… Fidelity. Accessed Nov. 17, 2020. As a result, its yield will tend to move toward prevailing money market rates, and may be lower than the yields of the bonds previously held by the Fund and lower than prevailing yields in the bond market. High-yield bonds can be an attractive vehicle for investors because they pay higher interest rates than investment-grade bonds. "VanEck Vectors Fallen Angel High Yield Bond ETF." Non-investment-grade debt securities (high-yield/junk bonds) may be subject to greater market fluctuations, risk of default or loss of income and principal than higher-rated securities. We examine the 3 best high-yield bond ETFs below. Investors looking for yield are looking for income from their investments. The best bond ETF should feature investment grade securities — have low risk of default, track its benchmark closely and provide the right balance between ease-of-trade and low fees. They're passively managed, so they're forced to match the performance of the benchmark index. High yield often translates to high risk. Accessed May 20, 2020. Accessed May 20, 2020. SPDR Bloomberg Barclays High Yield Bond ETF (JNK). They have a total return of 6.4% over the past 12 months compared to the S&P 500's total return of 18.4%, as of November 16, 2020. The best-performing high-yield bond ETF, based on performance over the past year, is the iShares U.S. Pacer ETFs. As of May 2020, the SEC Yield for FPE is 5.29% and the expense ratio is 0.85%.. ”Benefits of ETFs.” Accessed April 1, 2020. The portfolio also is relatively concentrated with just 40 holdings. As of May 2020, the SEC Yield for VYM is 3.77% and the expenses are cheap at 0.06%.. On the other hand, high-yield bonds (alternately known as "junk" bonds) also carry a greater chance of defaulting than investment-grade bonds, making them a riskier addition to a portfolio. The best-performing high-yield corporate bond fund, based on performance over the past year, is the Metropolitan West High Yield Bond Fund (MWHYX). SPDR Bloomberg Barclays High-Yield Bond (JNK) Another highly traded ETF that invests in high-yield bonds is JNK, which had an SEC Yield of 6.85% as of May 2020 and an expense ratio of 0.40%. "Pacer Trendpilot US Bond ETF." This one tracks the performance of the Bloomberg Barclays Municipal Custom High Yield Composite Index, which consists of U.S. high-yield, long-term, municipal bonds that offer tax-free income. The ETFs with the best 1-year trailing total return are FALN, ANGL, and PTBD. "Invesco KBW High Dividend Yield Financial ETF." High-yield bond funds also might hold long-term bonds, which have higher interest rate sensitivity than bonds with shorter maturities or duration. The top holdings of the first two ETFs are high-yield bonds issued by Carnival Corp., and the top holdings for the third ETF are high-yield bonds issued by Ford Motor Co. "ETF Screener." The fund's top holdings include high-yield bonds for Carnival; Sprint Capital; and Kraft Heinz Foods Co., a food and beverage company., PTBD tracks the Pacer Trendpilot U.S. High-yield bonds underperformed the broader market over the past year. The expense ratios of MLP funds can be high and sometimes difficult to understand, and these funds probably are best for investors looking for high yields, often as high as 7% or more. Xtrackers USD High Yield Corp Bd ETF. When interest rates are rising, long-term bonds will generally fall more in price than short- and intermediate-term bonds. "Vanguard Emerging Markets Government Bond ETF (VWOB)." These include white papers, government data, original reporting, and interviews with industry experts. Fallen Angels USD Bond ETF (FALN). Fallen Angels USD Bond ETF (FALN), VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL), Barclays US High Yield Fallen Angel 3% Capped Index – ETF Tracker, BofA Merrill Lynch US Fallen Angel High Yield Index – ETF Tracker, VanEck Vectors Fallen Angel High Yield Bond ETF. The SEC Yield is 4.19% and the expense ratio is 0.59% as of May 2020., This fund is a rare breed in that it's one of just a handful of ETFs that are actively managed. This means a high-yield ETF manager is forced to trade in a down market, even at unfavorable prices.. 4  As the ticker symbol suggests, JNK invests in bonds with credit quality below investment grade. The portfolio consists primarily of corporate bonds with maturities between three and 10 years, and with credit quality below investment grade (a rating below BBB by Standard & Poor's or below Baa by Moody's credit rating agencies). Accessed Nov. 17, 2020. 4. Accessed Nov. 17, 2020. 1. Investors who want to find yield with a low-cost ETF that invests in emerging markets bonds will like what they see in Vanguard's VWOB. ETFdb.com. Fidelity. Vanguard. "Barclays US High Yield Fallen Angel 3% Capped Index – ETF Tracker." The SEC yield for VWOB was 5.26% as of May 2020, and the expense ratio is 0.25%.. Accessed May 20, 2020. As of May 2020, the SEC Yield for HYD is 5.01% and the expense ratio is 0.35%.. The fund tracks the Barclays U.S. High Yield Fallen Angel 3% Capped Index, an index targeting so-called "fallen angel" bonds which were previously investment grade but have been downgraded to junk status as a result of the weakening of the issuer. Businesses suffering as a result of the COVID-19 pandemic have led to new fallen angel bonds across industries. That said, this diverse selection of funds should suit a variety of investing needs. There's one primary drawback of high-yield ETFs, however. Prospective shareholders should take note that this ETF focuses on small- and mid-cap stocks, which is not typical of most dividend funds—they often hold large-cap stocks. The primary advantages of high-yield ETFs over high-yield mutual funds are low fees, diversification, and intraday liquidity. There is a variety of high-yield ETFs on the market compared to high-yield mutual funds. “Investor Bulletin: Real Estate Investment Trusts (REITs),” Page 1. Accessed Nov. 17, 2020. Vanguard Canadian Short-Term Corporate Bond Index ETF (VSC) Best High-Yield Bond ETFs. We've included ETFs that pay high yields, but we've also included those that balance diversification with an income objective. Should You Invest in Broad Market Index Funds? This is a list of all US-traded ETFs that are currently included in the High Yield Bonds … The numbers are similar for XHY. "iShares iBoxx $ High Yield Corporate Bond ETF." The Xtrackers USD High Yield Corporate Bond ETF (HYLB, $47.82) is the only fixed-income fund in this list of high-yield ETFs, which makes sense given … Fallen Angel High Yield Index. A leveraged loan index (LLI) tracks the performance of leveraged loans as benchmark. High yield bonds may fluctuate in value greatly, depending on if the economic situation of the issuer is improving or worsening. According to ETFdb.com, there are roughly 280 bond ETFs, with expense ratios ranging from just 0.06% to 1.65%. Nonetheless, ANGL is likely to be most appealing to risk-tolerant investors who want to make a tactical allocation in the high-yield bond space. BulletShares High Yield ETFs The values of junk bonds fluctuate more than those of high quality bonds and can decline significantly over short time periods. The term "high-yield funds" generally refers to mutual funds or exchange-traded funds (ETFs) that hold stocks that pay above-average dividends, bonds with above-average interest payments, or a combination of both. Vanguard. "SPDR Bloomberg Barclays High Yield Bond ETF." You can learn more about the standards we follow in producing accurate, unbiased content in our. If you want to add one of the most widely traded high-yield ETFs on the market, iShares iBoxx $ High-Yield Corporate Bond ETF (NYSEARCA: HYG). Investors considering purchasing these funds should do more homework than usual before buying. As of April 2020, the SEC Yield for KBWD is high at 12.76% and the expense ratio is also high at 1.58%.. Investors seeking to benefit from the higher interest payouts of high-yield bonds while controlling some of the risk through diversification can invest in a basket of high-yield bonds contained in exchange traded funds (ETFs). Accessed May 20, 2020. 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