Even while 2024’s interest rate debate has made investors question their portfolio allocations, high yield strategies continue to bring in results.
BondBloxx’s Midyear 2024 Fixed Income Market Outlook highlights the strength of high yield corporate bonds. In particular, the research touts corporate bonds rated CCC for their strong yield and substantial fundamentals.
“Stronger fundamentals for U.S. high yield remain a clear differentiator this cycle, with average credit quality still near all-time highs. High yield corporate balance sheets remain well-positioned. Issuers continue to actively address their debt maturities, reducing the chance for a significant rise in corporate defaults,” BondBloxx wrote.
Options With Results
For yield-seeking investors who want to access junk bonds but don’t want to risk allocating to individual corporate options rated CCC, BondBloxx can help. Notably, investors can find strong such exposure with the BondBloxx CCC-Rated USD High Yield Corporate Bond ETF (XCCC ).
XCCC primarily provides portfolio exposure to a selection of junk bonds rated between CCC1-CCC3. While bonds rated CCC present a risk of default, they can lock in high yield while maintaining less potential default risk than corporate bonds rated CC and C.
While the fund holds a variety of bonds rated CCC, the portfolio’s duration tends to average out to an intermediate maturity. Intermediate maturity bonds can help mitigate reinvestment risk while being less sensitive to interest rate shifts in the long term.
Annually, XCCC has provided investors with strong return potential. As of June 30, 2024, the fund’s NAV has risen 11.05% over the last 12 months. Its performance is matched with good inflows, with XCCC seeing over $1.85 million in net flows over the past month, as of July 15, 2024.
Though some investors may be wary to hop into the risks of high yield investing, BondBloxx has extensive experience in the field of fixed income. The issuer’s largest fund, the BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF ), has over $1.1 billion in assets under management.
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