Introduction

Among income investments driven by equities, no compilation of the finest high-yield ETFs would be comprehensive without including a collection of speculative bonds.

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG, $77.82) offers investors access to around 1,200 high-yield bonds issued by financially distressed corporations, making it a leader in its asset class in terms of assets under management.

Although these companies, like Sirius XM Radio (SIRI) and Clear Channel Outdoor Holdings (CCO), are high-risk investments, they lure lenders with significantly higher interest rates on their debts to counterbalance the heightened risk involved.

One advantage of an ETF like HYG is diversification. While owning individual junk bonds can be risky, a diversified ETF helps mitigate these risks.

In times of broader economic slowdown, multiple companies may encounter financial difficulties.

Conclusion

However, a diversified high-dividend ETF like HYG ensures that solid payouts continue unaffected should only a few companies face challenges.