Appetite for US High Yield Bonds Remains High as Yields Tighten
05/11/2011 0 comments
| Assets Class | Symbols | 05/06 Trend Score | 04/29 Trend Score | Direction |
|---|---|---|---|---|
| International Inflation Protected | WIP | 6.74% | 9.22% | v |
| High Yield | JNK | 5.54% | 5.68% | v |
| International Treasury | BWX | 5.1% | 6.82% | v |
| Long Term Credit | LQD | 3.48% | 2.87% | ^ |
| Emerging Mkt Bonds | PCY | 3.48% | 2.21% | ^ |
| 20+ Year Treasury | TLT | 3.38% | 1.63% | ^ |
| Inflation Protected | TIP | 3.09% | 3.27% | v |
| 10-20Year Treasury | TLH | 2.88% | 1.73% | ^ |
| Intermediate Term Credit | CIU | 2.43% | 2.06% | ^ |
| Intermediate Treasury | IEF | 2.39% | 1.65% | ^ |
| US Total Bond | BND | 2.1% | 1.77% | ^ |
| MBS Bond | MBB | 1.92% | 1.83% | ^ |
| California Muni | CMF | 1.74% | 1.99% | v |
| National Muni | MUB | 1.57% | 1.24% | ^ |
| Short Term Credit | CSJ | 1.0% | 1.09% | v |
| New York Muni | NYF | 0.64% | 0.51% | ^ |
| Short Term Treasury | SHY | 0.55% | 0.53% | ^ |
| Treasury Bills | SHV | 0.08% | 0.07% | ^ |
You can get a no cost widget for any of these tables which will automatically update weekly.
At the end of last week (5/6/2011), high yield bond ETFs, represented by the SPDR Barclays Capital High Yield (JNK), stood among the top of the Fixed Income Return Table. Yields in the sector have declined as risk premiums have tightend on stronger performance by companies with lower credit ratings. While returns on corporate bonds have declined slightly in recent periods, ETFs that track the market have continually offered strong returns relative to other fixed income securities.
U.S. High Yield Bonds
05/06/2011| Description | Symbol | 1 Yr | 3 Yr | 5 Yr | Avg. Volume(K) | 1 Yr Sharpe |
|---|---|---|---|---|---|---|
| iShares iBoxx $ High Yield Corp | HYG | 17.67% | 7.03% | NA | 1,247 | 270.24% |
| SPDR Barclays Capital High Yield | JNK | 20.83% | 8.41% | NA | 2,972 | 279.79% |
| PowerShares Fundamental High Yield | PHB | 19.2% | 0.79% | NA | 302 | 318.25% |
Among US High Yield Bond ETFs, the top performers include the SPDR Barclays Capital High Yield (JNK), the Powershares Fundamental High Yield ETF (PHB), and the iShares iBoxx $ High Yield Corporate ETF (HYG) returning 20.83%, 19.20%, 17.67% respectively in the past year.
With the highest one-year return and the highest trading volume, the SPDR Barclays Capital High Yield ETF remains a srtong investment option. The ETF is well diversified, with no single bond comprising more than 4% of total assets and the top 10% of assets making up only 22.58% of the total.
Going forward, yields on high yield corporate debt should continue to tighten as long as companies continue to generate strong performance. Still, high yield corporate bond ETFs should continue to offer attractive returns relative to other fixed income assets.
Corporate bonds are an important component of diversified bond portfolios, as they offer greater returns and risks than government bonds. Due to their high level of interest paid, generally in the form of monthly distributions, corporate bond ETFs may be especially suitable for individuals approaching or already in retirement. As with any investment, it is important to make sure the risk and return levels match up with your personal investment goals.
Symbols: AGG, BND, SHV, SHY, IEF, TLH, TLT, TIP, WIP, HYG, JNK, PHB, CSJ, CIU, LQD, BWX, CMF, NYF, MUB, MBB, PCY, EMB
Tickers: (NYSE: AGG), (NYSE: BND), (NYSE: SHV), (NYSE: SHY), (NYSE: IEF), (NYSE: TLH), (NYSE: TLT), (NYSE: TIP), (NYSE: WIP), (NYSE: HYG), (NYSE: JNK), (NYSE: PHB), (NYSE: CSJ), (NYSE: CIU), (NYSE: LQD), (NYSE: BWX), (NYSE: CMF), (NYSE: NYF), (NYSE: MUB), (NYSE: MBB), (NYSE: PCY), (NYSE: EMB)
Disclosure:
MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.comments 0
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