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Investors are starting to favor junk bond ETFs over investment-grade

Investors searching for yield are increasingly turning to riskier corners of the market and one research firm thinks that’s a good strategy.

Inflows to exchange-traded funds holding below-investment grade debt, also known as “junk” bonds, are picking up steam, according to data from the firm, CFRA Research.

“Given how low yields are, we think the risk is warranted and rewarded,” Todd Rosenbluth, CFRA’s head of mutual- and exchange-traded fund research, told MarketWatch. “Given the likely economic improvement in 2021, and with interest rates so low, we think investors are wise to take on credit risk as they have been doing.”

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