垃圾债券回归(1)

Junk bonds are back, and packaged in a format designed to appeal to today's investors and get away from their seamy 1980s-era reputation. While bond funds are nothing new, junk bond exchange-traded funds,

which aim to mirror the makeup and performance of a particular index, are having a moment. Low interest rates driven by Federal Reserve policy has encouraged companies to borrow - leading to a record $51.5 billion of junk bonds issued in June.

Investors, hungry for decent yields, seem unable to get enough. On average, junk bonds yield 4.77%, compared to less than 1.1% for bonds overall.

The four largest high-yield ETFs, which collectively total $51.6 billion, saw net inflows of a combined $13.9 billion year to date through July 21. The Morningstar US High-Yield Bond Index rose 10.3% in the second quarter.

So What are junk bonds? Some quick background: Companies can raise money by issuing equity (stocks) or debt (bonds). Corporate bonds are rated for creditworthiness by the big ratings agencies.

The ones that fall below BB class as ranked by S&P (or Baa using Moody's ranking system) are termed "high-yield," a. k. a. junk bonds, in contrast to lower-risk "investment grade" issuances.

Bonds that fall into junk territory are deemed to pose at least some risk of being unable to meet their financial obligations in the long or short term, with lower-rated bonds at a greater risk of near-term default.

As tempting as high-yield debt might seem, especially given the paltry returns on safer investment vehicles like Treasuries, advisors say this isn't an asset class for the inexperienced. "When you move to the credit markets -

and the high-yield portion of the market - you really have to balance the yield opportunity with the risk of principal loss," says Bob Boyd, managing director at Pacific Asset Management.