The PowerShares Fundamental High Yield Corporate Bond ETF (NYSEArca: PHB), which has a 4.35% 30-day SEC yield, also holds a larger position in higher quality junk-rated debt, including 15% BBB-rated, 59% BB-rated and 25% B-rated.
Alternatively, investors can also take a look at the Market Vectors Fallen Angel High Yield Bond ETF (NYSEArca: ANGL), which has a 4.8% 30-day SEC yield. Fallen angels are corporate bonds that once held investment-grade credit ratings but, due to a variety of factors, were later downgraded to junk status. Fallen angel issuers tend to be larger and more established than many other junk bond issuers. Furthermore, since these fallen angels were formerly on the cusp of investment-grade status, this group of junk bonds typically has a higher average credit quality than many other speculative-grade debt-related funds. Specifically, ANGL’s credit quality includes BBB 1.8%, BB 76.9%, B 13.6% and CCC 4.5%.
For more information on speculative-grade debt, visit our junk bonds category.
Max Chen contributed to this article.