However, potential bond ETF investors should be aware that these funds do not perfectly track their underlying indices.
Potentially adding to tracking errors between the bond ETFs and the underlying benchmarks, liquidity in the primary debt securities market can affect an ETF’s performance. ETFs typically try to hold more liquid bonds and enact a sampling strategy where funds will only hold a sample collection that best represents the underlying index, which may result in a divergence in performance or so-called tracking error.
SPDR Barclays High Yield Bond ETF
Tom Lydon’s clients own shares of HYG and JNK.