If the market is in a sideways or downward movement, you may look at overweighting in bonds. In my income portfolio, I am slowly adding bond positions as I expect the market to continue lower. With the S&P 500 and the Dow forming a head and shoulders pattern (bearish technical pattern), the markets are heading for a correction, as investors got a little too bullish too early.
JNK vs SPY
SPDR Capital High Yield Bond Portfolio ETF (JNK) gets it ticker from the bonds the ETF holds which are less than investment grade. Since they are less than investment grade, many refer to them as “junk bonds”. When compared to a two-year chart with the S&P 500, SPDR Capital High Yield Bond Portfolio ETF (JNK) outperformed the S&P 500 SPDR ETF (SPY). Not only did JNK significantly outperform but it also returned a monthly dividend currently yielding around 14%.
Other High Yield Bond ETFs
iShares iBoxx High Yield Corporate Bond ETF (HYG) and PowerShares High Yield Corporate Bong ETF (PHB) are two more ways to play high yield bonds as they track different indexes and currently yield 10.5% and 11.26%, respectively.
DISCLAIMER: I do own shares of JNK.
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