PHB leans toward slightly higher quality corporate debt securities than its major competitors. The underlying Research Affiliates index implements a fundamental or smart-beta indexing methodology that focuses on four factors, including gross sales, gross dividends, cash flow and book value of assets for each issuer.

“We are forecasting spreads to tighten 35bp to 650bp by yearend 2016, absorbing only a portion of the expected 80bp rise in 5-year Treasury yields and leading to a year-end YTW of 8.90%. This equates to a below coupon full-year return of 5-6% for 2016,” said JPMorgan in the note posted by Barron’s.

SPDR Barclays High Yield Bond ETF

Tom Lydon’s clients own shares of HYG and JNK.