Are Junk Bond ETFs More than Junk?
October 23, 2015 at 14:25 PM EDT
In 2015, junk bonds underperformed in the overall market by a wide margin, with the five largest junk bond ETFs falling approximately 5% compared to S&P 500’s modest 0.5% decline (Figure 1). With a potential interest-rate hike and rising defaults from the energy sector, investors moved capital into high-yield municipal bonds or lower-yield securities through most of 2015 to mitigate these risks and ultimately improve risk-adjusted returns.
