ETF Spotlight: High-Yield Corporate Bonds

By Tom Lydon: The search for income yielding stocks and exchange traded funds has become commonplace these days and made dividend and high-yield bond ETFs very popular.

By Tom Lydon: Exchange traded funds that invest in high-yield corporate bonds have soared in October on signs the economy won’t slip into another recession as investors pile back into riskier assets.The rally has also been fueled by relief that European leaders have put together an agreement on Greek bond haircuts and beefing up the bailout fund. Investors flocked into the safety of U.S. Treasuries this summer amid the sell-off in equities and fears Europe’s debt crisis would explode.

By Tom Lydon: ETF Spotlight on iShares iBoxx $ HY Corp Bond Fund (HYG), part of an ongoing series. Assets: $14.2 billion. Objective: The iShares iBoxx & High Yield Corporate Bond Fund tries to reflect the performance of the iBoxx $ Liquid High Yield Index, which is comprised of liquid U.S. dollar-denominated, high-yield corporate bonds.

By Tom Lydon: As investors rushed back to the fixed-income market this year, speculative-grade debt has been strengthening. However, with Treasury yields rising again, one rate-hedged junk bond exchange traded fund has been outperforming.

By Tom Lydon: Van Eck Global's Market Vectors exchange traded fund division launched the first "fallen angels" corporate debt ETF Wednesday.

Jim Pyke submits:There are many articles that write about the benefit of high yield corporate bonds, formerly known by the term junk bonds. In addition to providing good yields, they provide additional diversification benefits. The easiest way for a casual investor to gain exposure is through mutual funds or ETFs. I'll focus on the latter.

By Tom Lydon: Investors are turning to junk bond and dividend ETFs for income in a low-rate environment. High-yield ETFs invest in bonds, while dividend funds target the stock market, so the two groups can perform differently.

By Tom Lydon: High-yield, "junk" bonds investors could be in for a rude awakening when interest rates tick higher. To combat interest rate risk, Van Eck Global, the money manager behind the Market Vectors exchange traded funds, recently launched a hedged junk bond fund.