“Investors might finally be dialing back their expectations for the junk bond market after its most recent foray into record-low yield territory and record-high dollar prices,” according to Barron’s. “This could be simply that the market’s taking a breather after shattering previous record-low yield levels.”
Other junk bond ETFs include PIMCO 0-5 Year High Yield Corporate Bond Index Fund (NYSEArca: HYS) and PowerShares High Yield Corporate Bond Portfolio (NYSEArca: PHB).
Aside from above-average yields, some investors are bullish on junk bond ETFs due to low default rates and cleaner corporate balance sheets.
“Many investors also are wary of calling a top to the rally. Some did so last year, only to watch demand increase after the Federal Reserve pumped money into financial markets and pushed interest rates lower,” the WSJ reports.
“The Fed is essentially saying to private investors, ‘Get out, move, invest in places that have the ability to drive growth,’ and that bodes well for high-yield bonds,” said Sam Diedrich, portfolio manager at Pacific Alternative Asset Management Co., in the story.
iShares iBoxx High Yield Corporate Bond
