High Yield Corporate Bond

High-yield corporate bond funds and ETFs focus on the high yield or... High-yield corporate bond funds and ETFs focus on the high yield or junk segment of the corporate bond market. Corporate bonds are debt securities issued by companies, as opposed to government entities. The yields on these bonds tend to be higher than on investment-grade corporate bonds, because the issuers are at the low end of the credit quality spectrum that indicates a greater risk of default. These securities are typically rated below Baa3 by Moody's, or below BBB by Standard and Poor’s (S&P). High-yield corporate bond bonds and ETFs can focus on a variety of domestic and international issuers and can be passively or actively managed. They can also hold bonds of various maturity spectrums depending on the fund’s underlying mandate. The average duration (time to maturity) of a fund’s portfolio indicates how sensitive its price will be to changes in interest rates. Accordingly, investors concerned about the possibility of a rise in interest rates will tend to own high-yield bond funds and ETFs with a low duration. Meanwhile, investors who think interest rates may fall will tend to own high yield bond funds and ETFs with a higher duration. Last Updated: 01/30/2025 View more View less

High-yield corporate bond funds and ETFs focus on the high yield or junk segment of the corporate bond market. Corporate bonds are debt securities issued by companies, as opposed to government entities. The... High-yield corporate bond funds and ETFs focus on the high yield or junk segment of the corporate bond market. Corporate bonds are debt securities issued by companies, as opposed to government entities. The yields on these bonds tend to be higher than on investment-grade corporate bonds, because the issuers are at the low end of the credit quality spectrum that indicates a greater risk of default. These securities are typically rated below Baa3 by Moody's, or below BBB by Standard and Poor’s (S&P). High-yield corporate bond bonds and ETFs can focus on a variety of domestic and international issuers and can be passively or actively managed. They can also hold bonds of various maturity spectrums depending on the fund’s underlying mandate. The average duration (time to maturity) of a fund’s portfolio indicates how sensitive its price will be to changes in interest rates. Accordingly, investors concerned about the possibility of a rise in interest rates will tend to own high-yield bond funds and ETFs with a low duration. Meanwhile, investors who think interest rates may fall will tend to own high yield bond funds and ETFs with a higher duration. Last Updated: 01/30/2025 View more View less