High Yield (Junk) Bond ETFs
High yield bond ETFs hold corporate bonds rated below investment grade (BB+ and below) — also called "junk bonds." They offer materially higher yields than Treasuries or investment-grade corporates as compensation for elevated default risk. High yield is more correlated with equities than with other bonds, which makes it both a yield enhancer and a risk-on asset class.
Maturity Ladder
iShares 0-5 Year High Yield Corp
iShares
iShares High Yield Corp Bond
iShares
Xtrackers USD High Yield Corp
Xtrackers
SPDR Bloomberg High Yield Bond
SPDR
Frequently Asked Questions
What is a "junk" bond?▼
A junk bond — or high-yield bond — is a corporate bond rated below investment grade (BB+ or lower by S&P, Ba1 or lower by Moody's). The lower rating reflects higher default risk; in exchange, investors demand a higher yield.
Are high yield bond ETFs risky?▼
They sit between investment-grade bonds and stocks on the risk spectrum. Defaults in the high-yield universe typically run 2-5% annually, but can spike to 10%+ in recessions. Price drawdowns in 2008 reached -30%; in 2020 they hit -20% before recovering. They are correlated with equities — they do not provide the same flight-to-safety as Treasuries.
HYG vs JNK: are they interchangeable?▼
They are very similar — both hold high-yield US corporate bonds with comparable yields and durations. HYG (iShares) historically has higher trading volume and tighter spreads, making it preferred for tactical trading. JNK (SPDR) typically has a slightly lower expense ratio, making it preferred for buy-and-hold.
Other Fixed Income Categories
Treasury yields and ETFs from 1-month bills to 30-year bonds.
Sovereign bond ETFs covering developed-market governments outside the US.
Total-market bond ETFs spanning Treasuries, corporates, and mortgages.
Investment-grade corporate debt, sliced by maturity.
Treasuries whose principal adjusts with CPI inflation.
State and local government debt — federal-tax-exempt income.
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