High Yield Bond Funds - A Unique Double Digit Opportunity

Utilizing High Yield Bond Funds is a great way to both achieve higher yields than Treasuries or most dividend paying stocks while diversifying risk across various sectors and credit ratings. Many High Yield Bond ETFs hold a diverse set of corporations, which protects the overall portfolio from risk of simultaneous default given the low likelihood of a complete economic collapse in all sectors. A High Yield Bond Fund is a mutual fund that is actively managed whereby the fund manager seeks to include corporate debt from companies that are believed to remain solvent, while avoiding companies that appear to be a credit risk.

Investors should consider that the rate of corporate defaults does increase during time of recession, especially at the tail end. However, the market has already priced in this historical performance, and then some, given the lack of liquidity and fear that still grips the market.

Tax Efficient Investing

By investing in a Junk Bond Fund in a self-directed IRA or other tax protected account, you can continue to receive income for years while deferring taxes until later, thus further compounding your returns. Regardless of your approach, now is an opportune time to consider these high yielding bond mutual funds as part of your investment portfolio.

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