High-Yield, Junk Bond ETFs

High-yield corporate bond ETFs have been a big hit the past few years with investors seeking to boost income amid rock-bottom interest rates.

For example, junk bond ETFs have seen their assets explode to $30 billion in less than six years. [Junk Bond ETFs and Rising Rates]

The iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG) and the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) are the two largest ETFs that invest in speculative-grade bonds.

HYG, which is managed by BlackRock, has a 0.50% expense ratio and JNK, sponsored by State Street, has a 0.40% expense ratio. HYG is larger with $15.2 billion in assets versus $12.2 billion for JNK.

Both ETFs are billed as high-yield corporate ETFs and their three-year and five-year performance numbers are very similar. Nevertheless, the funds have some differences that investors should take care to understand before purchasing.

In terms of 30-day SEC yields, HYG is paying 5.18% while JNK is paying 5.26%.

HYG has more holdings at 755 compared with 521 for JNK. [Is the High-Yield Bond ETF Rally Really Over?]

The credit quality of HYG’s holdings appears a little better, although not significantly. This has led to a slightly lower standard deviation, a measure of price volatility.