Best Bond ETFs Investing 2019

Investors all over the world have one goal in mind: to increase their income from their investments. Long-term investors typically aim to create diversified portfolios and look for growth in their portfolios, as well.

Those who are looking for high-yield bond ETFs are looking for income from their investment, such as above-average interest payments. If you are an investor that is attempting to find high-yield bond ETFs to invest in 2019, then you have come to the right place.

In this article, you will find the best five high-yield bond ETFs. Let’s review the best bond ETFs for fixed-income investors to buy this year:

iShares iBoxx $ High Yield Corporate Bond ETF (HYG)

This high-yield bond ETF provides broad exposure to U.S. high-yield corporate bonds and is one of the largest and most widely traded high-yield bond ETFs on the market. It was the first mover in the high-yield corporate market as well.

The iShares iBoxx $ High Yield Corporate Bond ETF tracks the investment results of an index composed of U.S. high-yield corporate bonds. The fund has an expense ratio of 0.49%, 1,025 holdings, and net assets of over $14.9 billion.

Investors can invest in corporate bonds with maturities between three and ten years. The relatively high beta ratio demonstrates that the fund has greater volatility. However, the appeal of this high-yield bond ETF as part of an investor’s portfolio are the regular paychecks. 

Current Yield: 5.39 percent

Alerian MLP (AMLP)

If you are interested in short-term investments, you should consider the Alerian MLP ETF (AMLP). Master Limited Partnerships (MLP) offers high dividend yields. However, its performance can be volatile compared to some more conservative bond funds.

Alerian MLP is the largest ETF in its industry and is designed to simplify the process of investing in MLPs. As it operates as a corporation, it is essential to know that the Alerian MLP ETF pays corporate taxes on the distributions received on its MLP Investments. This means that distributions from the ETF to its shareholders are then taxed again as dividend income.

This fund tracks the Alerian MLP Infrastructure Index, which is a portfolio of 25 MLPs. They generate income from investing in energy-related industries. Before buying Alerian MLP ETFs, investors should do in-depth research.

Current Yield: 8.19 percent

Vanguard Emerging Markets Government Bond ETF (VWOB)

The VWOB ETF is outperforming the major emerging markets ETFs this year. It tracks the Bloomberg Barclays USD Emerging Markets Government RIC Capped Index.

Investors invest in emerging-market debt through a portfolio that consists of about 1,000 individual bonds. The average duration is 6.4 years, and the expense ratio is 0.32 percent.

By buying VWOB ETFs, investors create a diversified fixed-income portfolio. If you want to invest in low-cost ETF that invests in emerging market bonds, then you will like what you see in the Vanguard Emerging Markets Government Bond ETF.

Current Yield: 4.5% percent

Pimco 0-5 Year High Yield Corporate Bond ETF (HYS)

The exchange-traded fund that is incorporated in the USA seeks to track the performance of the BofA ML 0-5 US High Yield Constrained Index. THE HYS is designed to capture continuous exposure to the short maturity segment of the high-yield corporate bond sector.

HYS is built with high-yield corporate loans that come due in five years or less. However, the fees are a little bit higher than the typical index fund.

Current Yield: 5.14 percent

SPDR Bloomberg Barclays High Yield Bond ETF (JNK)

SPDR Bloomberg Barclays High Yield Bond ETF is a high-liquid high-yield corporate bond fund. It seeks investment results that correspond to the price and yield of the Bloomberg Barclays High Yield Very Liquid Bond Index.

This fund has a huge asset base of more than $8 billion in total assets and a broad diversification of more than 860 different holdings. In fact, the ETF’s portfolio is one of the most comprehensive in the segment, for which JNK charges a reasonable fee.

Current Yield: 5.7 percent

Conclusion

When investing in bonds with low credit quality, which is called junk bonds, investors need to be extremely careful. High-yield bonds have higher risk levels even though they carry a higher-than-market yield.

Some investors find high-yield bond ETFs attractive for income purposes. However, owning high-yield bond ETFs comes with particular risks. For example, they can fall in price in recessionary environments.

If you are an investor who favors high-yield bond ETFs or wants to invest in ETFs, you should study the market and what it has to offer. Finding the right ETF to invest in takes time. To build a well-diversified portfolio that will generate fixed-income, you will have to do your homework.

Also, the total value of the bond market is more than $40 trillion. So, don’t put everything down on a single stock or investment.

If you are unsure whether ETFs are right for you and your investment goal, then this article “ETF vs. Mutual Fund: Where to Invest? [2019]” might help you decide where you should invest this year.