ETF Research and Analysis

by John Gabriel
Suitability
For strategic, long-term exposure to U.S. high-yield bonds investors may consider PowerShares Fundamental High Yield Corporate Bond Index as a small core holding. The fund can also serve as a tactical investment for the   Read more 

Bull Case

This fund gives investors diversified exposure to the high-yield bond market without including the riskiest borrowers, which mitigates the impact of a single issuer defaulting.
This fund offers a unique strategy and has low costs relative to actively managed funds.
U.S. high-yield bonds have displayed extremely attractive risk-return characteristics, outperforming U.S. equities over the past decade with significantly less volatility. Read more 

Bear Case

The current credit spread is below its long-term average.
If actual high-yield corporate default rates rise more than expected due to weakness in the global economy, then high-yield bonds may underperform.
Disruptions in the credit markets could potentially cause this fund to trade at significant premiums and discounts to its NAV. Investors should take care when transacting in the fund. Read more 

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