High-Yield Bonds

From 2008 to 2012, investment-grade and high-yield corporate bond funds doubled in size, to $1.2 trillion and ~ $250 billion, respectively. The U.S. junk bond market is estimated to have an overall value of $1 trillion. Over the past 15 years, the “spread” between high-yield corporates and Treasurys was six percentage points. As of February 2012, the high-yield bond index was yielding 7.3%, far below its 15-year average of 10%.