The longest available series for high-yield bond returns is the Merrill Lynch 100 High Yield Index.
Even worse for investors: Some funds haven't come close to matching high-yield bond indexes.
"I think the heroic turnaround is somewhat overstated, " says George Lynch, a high-yield bond manager for Invesco.
That move reduced all equity and high-yield bond exposure, creating 50% cash or cash equivalent allocations across all portfolios.
When they are deeply below net-asset value, as high-yield bond funds are now, they can be very good buys.
The high-yield bond market is returning as much as most stock markets anywhere.
Computer models are written for everything from determining early pre-payments on mortgages to the probability that a high-yield bond will default.
In the year to date, however, narrowing spread levels have helped high-yield bond returns narrowly exceed those of loans (see below).
Two high-yield bond funds Appel is still holding: Northeast Investors Trust ( NTHEX) and Federated High-Yield Trust ( FHYTX) .
Vivendi had given itself some room to take less cash, say credit analysts, thanks to earlier asset disposals and high-yield bond issuance.
Market players relay that investors are scaling back their bets on the high-yield bond market ahead of earnings season and alongside a fifth consecutive session of declines in the equity markets.
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There are people who will reach for yield either by going to a high-yield bond fund or maybe a long-term bond, but those, for me, pose a little bit too much risk.
Using the era's best computers, Milken calculated that he could dive down to the swamp's bottom and rescue the credit unworthy ... if he could pool enough of the poor suckers into one high-yield bond and price it appropriately for the risk.
Of course, second-lien debt is a niche product for issuers that require higher leverage than is usually available in the first-lien market, but that in many cases are locked out of the regular-way high-yield bond market because of size, credit quality, or complexity.
Another bull on high-yield bond funds is Jack Bowers of Fidelity Monitor, who is recommending Fidelity Strategic Income (nasdaq: FSICX - news - people ), which has 40% in high-yield debt, tempered by 60% in foreign and U.S. investment grade and government issues.
Typically mutual funds is where we are looking at quite substantially right now for really one reason, and those tend to trend better with a lot less risk, so you know you can have market-like rate of return on high-yield-bond mutual funds with historically a third of the downside risk of the markets.
Guggenheim Investments filled that gap with its BulletShares ETFs, a menu of investment-grade and high-yield corporate-bond funds.
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But investors aren't being adequately compensated for the risks they are taking, says Martin Fridson, CEO of FridsonVision, a high-yield-bond research shop.
Imagine, in JPMorgan Chase's case, the frustration at being the leading credit derivatives house, high-yield-bond underwriter and fixed-income research firm (among other things) and then losing on some bets on interest rates.
As default risk is the primary driver of high-yield corporate bond prices, as opposed to interest rate direction, when the economy expands, the risk of high-yield corporate bonds defaulting is reduced and this is reflected in lower volatility.
Consider a high yield exchange-traded fund like the Barclays High Yield Bond SPDRS ETF (NYSE: JNK).
Coupled with that, I do want to say that what I feel is one of the best investments out there for anybody who wants to play the equity markets is actually derivative equities, and that would be a high-yield or junk bond.
The return on high-yield bonds according to the Merrill Lynch High Yield Bond Index is the highest it has ever been, at 7%, up 2.9% year-to-date.
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The markets have been abuzz with rumours about losses at some banks (mainly investment banks) in the high-yield (junk) bond market recently.
High yield bond funds like Janus High-Yield (JAHYX) or Fidelity High Income (SPHIX) have consistently performed better than high yield ETFs like SPDR Barclays Capital High Yield ( JNK) and iShares iBoxx High Yield ( HYG) and with less volatility.
My bond recommendations in 2012 ranged from high-yield to pipelines, refineries, autos and bond funds, all short duration.
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In Europe, there were no high-yield (meaning risky) bond issues in the whole of 2008.
If selecting and monitoring individual bonds is too much of a hassle for you, then buy the PIMCO 0-5 Year High Yield Corporate Bond ETF (HYS) .
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