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SPDR Bloomberg Barclays High Yield Bond ETF: High-Risk, High-Reward Proposition

Published Mon, 30 Nov 2020 15:17:41 -0500 on Seeking Alpha

Seeking AlphaETF AnalysisSPDR Bloomberg Barclays High Yield Bond ETF: High-Risk, High-Reward PropositionNov. 30, 2020 3:17 PM ET|| About: SPDR Bloomberg Barclays High Yield Bond ETF (JNK)by: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryTracks a market-weighted index of highly liquid, high-yield, U.S. dollar-denominated corporate bonds.
One of the largest ETFs tracking junk bonds with an AUM of $12.77bn.
Well-diversified ETF with 1,000+ holdings.
Bond investors are the vampires of the investment world. They love decay, recession - anything that leads to low inflation and the protection of the real value of their loans. - Bill Gross
The SPDR Bloomberg Barclays High Yield Bond ETF (NYSEARCA: JNK) offers investors exposure to the junk bond segment. The ETF looks to provide investment results that generally correspond to the price and yield performance of the Bloomberg Barclays High Yield Very Liquid Index. The fund typically invests substantially all (minimum 80%) of its total assets in the securities comprising the index. It invests in an index that holds middle-rated bonds with at least one year to maturity and a minimum of $600mn in outstanding face value of debt. Exposure to each eligible issuer will be capped at two percent of the index. Given the current low-interest rate environment, many investors are being drawn towards high-yielding debt instruments. The majority of the fund's exposure is the U.S. corporations (~84.3%), followed by European Corporations (~15.7%). Investors who have done their due diligence on the holdings of a particular junk bond fund are in a position to generate attractive returns from these powerful products.

JNK Sector Exposure


Source: SSgA. Data as of Sept. 30, 2020
The majority of the fund's exposure is to the consumer and communications sector (~52%). In terms of bond ratings, most of its exposure is the bonds that... Read more