High Yields/High Risk: iShares iBoxx $ High Yield Corporate Bond ETF
10/31 Yield: 6.85%
Expense Ratio: 0.5%
As they say, the greater the reward, the greater the risk. If that’s true for income investors, then they can expect big things from the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG). Yes, it’s a “junk bond” fund, but with a yield of 6.86%, the colloquialism is irrelevant — the payout is the part to focus on.
But doesn’t junk eventually rot, break or disintegrate? Sometimes — but you might be surprised to find out some of the companies whose debt technically qualifies as “junk,” at least according to their credit rating. This fund holds debt from companies like Sprint (NYSE:S), First Data and Community Health Systems (NYSE:CYH). That’s not to say they’re all wildly profitable, but you certainly could do a lot worse.
The runner-up for the high-yield ETF category is the SPDR Barclays Capital High Yield Bond ETF (NYSE:JNK), which currently is paying out 6.94%.