High-Yield Bond ETFs Come with Risks | Page 2 of 2 | ETF Trends

However, investors need to remember high-yield corporate bonds have different risks than U.S. government debt.

Everyone is recommending junk bonds but they require extra research and care, junk bond trader Robert Levine told Bloomberg. “It’s not a no-brainer,” he said.

Aside from default risks, high-yield bonds may be overvalued after their strong run. If rates rise, the bond ETFs could also take a hit.

“There is a lot of money rushing into this space right now. As quickly as it came in, you could see that money flow out,” said Paul Jacobs, a financial planner at Palisades Hudson Financial Group.

During the first quarter of 2012, investors shoveled $31 billion into high-yield bond funds, according to the article.