Which Junk Bond ETF Is Best For 2015? Part 1

Which Junk Bond ETF Is Best For 2015? Part 1

A Seeking Alpha Contribution

Summary

  • JNK has a higher yield and lower expenses.
  • HYG has higher credit quality and lower volatility.
  • JNK and HYG have near identical returns over the past 5 years.
  • Both have seen their payouts decline along with interest rates.

The two largest high yield bond funds are the iShares iBoxx $ High Yield Corporate Bond (NYSEARCA:HYG) and the SPDR Barclays Capital High Yield Bond ETF (NYSEARCA:JNK). These funds use very similar strategies that result in largely similar portfolios and performance, with a few small variations.

Index & Strategy

HYG tracks theĀ Markit iBoxx USD Liquid High Yield Index, while JNK tracks the Barclays High Yield Very Liquid Index. These two funds are highly correlated, to the tune of 0.9985 since 2006. Since 2010, the correlation rises to 0.9995…. To Continue Reading Please, Click Here.

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