Domestically, seeking opportunities within high yield might seem like an arcane idea given the serendipitous bull run came to a crashing halt in the volatility-laden fourth quarter of 2018. The risk-on sentiment that fueled three-fourths of 2018 may have gone asunder as the massive sell-offs took place to end 2018.

Nonetheless, investors are still on the hunt for high-yielding income despite the challenges that loom in the debt market. One of those is the Federal Reserve’s policy regarding interest rates.

Following the central bank’s decision to keep interest rates unchanged last month, there’s been a recurring theme of “patience” in Fedspeak as of late. Federal Reserve Chairman Jerome Powell reiterated patience during last month’s press conference following the rate announcement and also mentioned that the U.S. economy is in a “good place.”

In move that was widely anticipated by most market experts, the Federal Reserve last month elected to keep rates unchanged, holding its policy rate in a range between 2.25 percent and 2.5 percent. In addition, the central bank alluded to no more rate hikes for the rest of 2019 after initially forecasting two.

Lesser rate hikes could mean lesser yield in the bond markets, particularly for debt issues that feature a floating rate component.

“We as a market have a tendency to swing very far in both directions,” said Henry Peabody, a portfolio manager for Eaton Vance’s multisector bond strategy.

“I would expect there would be interest in the loan market based on the well-established desire for floating rates,” Peabody added.

Despite signs of a global economic slowdown, Federal Reserve Vice Chairman Richard Clarida threw his support behind the U.S. economy, saying it has room to grow. A decade following a punishing financial crisis, Clarida said “the current economic expansion almost certainly will become the longest on record.”

Unexpected rate hikes would certainly give high yield investors something to cheer about, but until then, they need to be strategic with their capital deployment in the bond markets.

For investors seeking the best-performing high-yield bond ETFs, here are 10 to consider:

SymbolETF NameTotal Assets (In Thousands of Dollars)YTDAvg VolumePrevious Closing Price1-Day Change
BSJQInvesco BulletShares 2026 High Yield Corporate Bond ETF$12,724.6710.54%7,360.00$25.49-0.04%
FALNiShares U.S. Fallen Angels USD Bond ETF$80,493.3410.49%25,194.00$26.57-0.15%
HYUPdb x-trackers High Beta High Yield Bond ETF$149,299.7110.42%1,795.00$48.87-0.10%
ANGLVanEck Vectors Fallen Angel High Yield Bond ETF$972,871.0410.31%307,171.00$29.040.14%
BSJPInvesco BulletShares 2025 High Yield Corporate Bond ETF$58,213.9210.15%19,270.00$24.28-0.16%
HYGVFlexShares High Yield Value-Scored Bond Index Fund$41,563.6510.07%5,041.00$48.93-0.16%
WFHYWisdomTree Fundamental U.S. High Yield Corporate Bond Fund$15,363.969.81%4,895.00$51.280.04%
FLHYFranklin Liberty High Yield Corporate ETF$10,308.119.40%533$25.82-0.04%
HYLSFirst Trust Tactical High Yield ETF$1,193,251.979.35%175,246.00$48.14-0.06%
PHYLPGIM Active High Yield Bond ETF$27,537.649.33%441$40.92-0.05%

* Assets in thousands of U.S. Dollars. Assets and Average Volume as of 2019-04-24 20:15:03 UTC via ETFdb.

For more market trends, visit ETF Trends.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.