Related: BulletShares Target-Date Bond ETFs to Hedge Rising Rate Risk
Due to their greater risk profile, high-yield bonds have been more correlated with major U.S. equity indices, which have experienced wider oscillations in recent months.
On the other hand, senior secured floating-rate bonds and related ETFs have attracted greater interest in a rising-rate environment since they come with an adjustable coupon, which helps diminish rate risk. Retail investors have funneled in more than $4 billion into loan funds this year. For example, the popular PowerShares Senior Loan Portfolio (NYSEArca: BKLN), which includes a floating interest rate component, has brought in $342 million in net inflows year-to-date, according to XTF data.
For more information on the speculative-grade debt market, visit our junk bonds category.