JNK has an adjusted duration of 4.11 years and a 5.05% 30-day SEC yield. HYG has an effective duration of 3.84 years and a 4.86% 30-day SEC yield.
ETFs have been a great way for investors to easily access speculative grade debt.
“High-yield ETFs are being used more by institutional investors as well as traders such as hedge funds,” Mazza said. “They’re cost effective, transparent and index-based. Some investors are using JNK rather than purchasing individual securities/bonds. New regulations such as Dodd-Frank and Basel III put restrictions on a bank’s ability to own or trade certain bonds.”
Looking ahead, junk bond ETFs will continue to have a place in an investor’s portfolio.
“The appeal of high-yield bonds is that the economy is slowly improving, and corporate balance sheets and cash flows are healthy,” Mazza added.
For more information on high-yield fixed-income funds, visit our high-yield bonds category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own JNK and HYG.