While high-yield speculative-grade debt offer attractive income opportunities, the asset category is not without its risks. U.S. energy companies, notably the nascent shale oil industry, has fueled junk debt, but the depressed crude oil prices has increased default risks.
“Investors are piling into bets on equities that track high-yield bonds, with BlackRock’s ETF absorbing $1.2 billion last week, the most since inception in April 2007. The total included a single-day record of $481 million on Feb. 16,” according to Bloomberg.
iShares iBoxx $ High Yield Corporate Bond ETF
Tom Lydon’s clients own shares of HYG and JNK.