If the bond markets are telling us anything, it’s that investors are looking to take on more risk…but whoa, not too much risk. Lower-rated investment-grade companies are slowly replacing their higher-rated counterparts in popularity and exchange traded funds (ETFs) that hold these bonds can give you diversified access.
A fundamental shift is taking place in corporate America and overseas as companies with low investment-grade ratings are replacing their higher-rated rivals as the most important driver of the bond markets this year. [Interest Rate Impact on Bond and Equity ETFs.]
Bond analysts estimate that globally, 65% of the corporate investment-grade bonds (excluding financials) that have come to market so far this year were rated in the BBB band, Radi Kasawneh for The Wall Street Journal reports. This is the lowest rating for an investment grade bond; after that, it’s rated “junk.” [What ETF Investors Want Now.]
The junk bond market is also robust right now.