Equity strategies are not the only portfolio allocations that can benefit from diversification this year. With all eyes on the Federal Reserve ahead of potential rate cuts and leadership changes, many advisors and investors are reassessing their fixed income portfolios before the bond market shifts too much. As such, it could prove to be prudent to take a more diversified approach to fixed income investing. High yield bonds continue to be relied upon by many as a means to help build a diversified fixed income portfolio.
This space not only offers sector diversification, but significant income that could balance out fluctuating bond prices. These perks could prove to be especially potent should the bond default environment continue to remain low.
There are plenty of different ETFs that claim to offer distinct approaches to gaining exposure to high yield bonds. As such, it remains prudent for advisors and investors to perform their due diligence and seek out the strategies that actually do bring something different to the table.
How BKHY Approaches High Yield Bond Investing
For instance, take a closer look at the BNY High Yield ETF (BKHY).BKHY aims to offer a blend of income and capital appreciation through its distinct approach to high yield bond investing. The fund looks to stand out from the crowd through the use of its systematic investment process.
The systematic investment process focuses around the Bloomberg US Corporate High Yield Total Return Index. Despite being an actively managed fund, much of BKHY’s assets are focused on bonds included within this index. However, this is where BKHY’s systematic investment process comes into play.
In particular, this process employs a proprietary credit model to seek out opportunities from fallen angels and other undervalued bonds within the index.. This proprietary model also looks to minimize exposure to potentially overvalued securities, which can help promote stronger downside risk management. This is all done in order to help the fund outperform the index
Furthermore, BKHY’s overall portfolio trends toward a more resilient form of high yield bond exposure. As of July 31, 2025, nearly 90% of the fund’s portfolio comprised bonds rated B or BB. These higher-rated bonds may be at less risk of default than lower-rated junk bonds. This lets investors tap into the diversification potential of high yield bonds, while possibly being less exposed to risk of default.
Currently, BKHY’s strategy is offering competitive yield alongside its diversification benefits. As of September 5th, 2025, the fund has a 30-day subsidized yield of 6.85%.
For more news, information, and strategy, visit the Portfolio Strategies Content Hub.
