That need for high-yielding assets could be spurred on even more should a year-end rally occur in U.S. equities. Even though both the stock and bond markets march to the beat of their down drum, a risk-on sentiment could fuel either asset class.
High-Yield ETF Options
To satiate an appetite for high yield, investors can look to fixed-income exchange-traded funds (ETFs) like the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG), ProShares High Yield—Interest Rate Hedged (BATS: HYHG) and WisdomTree Interest Rate Hedged High Yield Bond ETF (NasdaqGM: HYZD).
HYG tracks the investment results of the Markit iBoxx® USD Liquid High Yield Index, which is comprised of high yield U.S. corporate bonds that have less than investment-grade quality. HYHG tracks the performance of the Citi High Yield Index and allocates 80% of its total assets in high-yield bonds and short positions in Treasury Securities in order hedge against rising rates HYZD seeks to track the price and yield performance of the BofA Merrill Lynch 0-5 Year U.S. High Yield Constrained, Zero Duration Index, which provides long exposure to the BofA Merrill Lynch 0-5 Year U.S. High Yield Constrained Index while seeking to manage interest rate risk through the use of short positions in U.S. Treasury securities.
For more trends in fixed income, visit the Fixed Income Channel.