981 Risky Bonds to Sell, 400 Safe Ones to Buy Instead (for 7.7%)

Be careful how you buy your bonds. The most popular tickers have a few “fatal flaws” that’ll doom you to underperformance at best, or leave you hanging in the event of a market meltdown at worst! Let’s pick on the widely followed and owned iShares iBoxx High Yield Corporate Bond ETF (HYG) as an example. It has attracted $15 billion in assets because: It’s convenient – as easy to buy as a stock. It’s diversified (for better or worse, as we’ll see shortly) with 981 individual holdings. It pays–5.6% today, to be specific. The accessibility of funds like HYG appears cute and comfortable enough.… Read more