ETFs indexed to preferred stock and high-yield bonds have been a favorite among income-seeking investors the past few years in a low-rate environment. Performance chasers who bought in this year are now sitting on losses, however.
PFF, the preferred share ETF, is currently paying a 30-day SEC yield of 5.3%, while the high-yield fund JNK pays 5.6%.
Earlier this year, demand for junk bond ETFs pushed yields under 5% for the first time. [Junk Bond ETF Yields May Fall Below 5% Amid Scramble for Income]
SPDR Barclays High Yield Bond ETF
iShares U.S. Preferred Stock ETF
Full disclosure: Tom Lydon’s clients own JNK.