Market Vectors High-Yield Muni ETF (HYD), currently up 7.1% in the last three months. HYD is a relatively new ETF that invests mainly in high yield municipal bonds. But around 25% is in investment-grade bonds. HYD has a 30-day SEC yield of 7.16%, which is better than the taxable bonds. Those in the 28% tax bracket will have tax-equivalent yield of 9.94%, and those in the 35% tax bracket will have as much as 11.02%.
It should be noted that HYD is ideal for a taxable account and people in a high tax bracket. JNK and PFF are better for tax-deferred accounts, McCall says.
Always be sure to watch the trend lines first to find areas that have entered into a potential long-term uptrend. Then explore the characteristics of the funds, including volume, assets and yield.
Max Chen contributed to this article.
