3 High Yield Bond Funds

These days exchange traded funds continue to provide a fast growing alternative to mutual funds, and the opportunities for investors continue to increase. One investment area where exchange traded funds or ETFs are particularly attractive due to low cost and ease of investment are bond funds. Choosing the right bond fund depends on the level of risk you're willing to accept. In this article we'll talk about high-yield or so-called junk bonds.

First of all, how are yields among different bond investments comparing today? First lets start by looking at a conservative option, the iShares Short Treasury Bond (SHV - $110 a share). The yield on this fund is a paltry 0.58%. Not surprising since interest rates are practically zero. If you want to protect your capital, this might be an option, but a slight bit of inflation could erase that in a hurry.

Stepping up the ladder, we find another iShares bond fund, the Investment Grade Corporate Bond ETF (LQD - $105.51 a share). This fund offers a middle of the road approach between completely secure Treasury's that are currently paying almost nothing and high-yield junk bonds. The yield on this fund currently sits at 5.37%. Not bad, since investment grade bonds are basically a safe investment.

Now let's turn to the Junk Bond ETFs.

1. SPDR Barclays High Yield Bond Fund (JNK - $39.87)
Not only is this fund relatively inexpensive at $40 a share, the current yield looks great-checking in at 12.56%. This fund invests in 150 junk bonds. With a yield pushing close to 13%, its looking a whole lot better than Treasury's and even investment grade bonds.

2. iShares IBOXX High Yield Corporate Bonds (HYG - $89.12)
This fund invests in a diverse mix of 300 junk bonds. The current yield is a little bit lower than the JNK ETF, sitting at about 9. 8%. The yield is probably a bit lower because the fund has a cut off at the S & P rating of B-.

3. Powershares High Yield Corporate Bond (PHG - $18.20)
This is a smaller fund that invests in about 50 different bonds. The bonds are equally weighted giving investors some protection from any one individual corporation that makes up the fund going into default. The yield at the present time is similar to the iShares fund, sitting at about 9%.

If you can handle the high amount of risk that comes with junk bonds, these three options offer an appealing and easy way to get into the junk bond market. With your risk spread out over multiple bonds, a junk bond ETF gives you a way to mitigate that risk while enjoying the advantages of the high yields.

Please note that quoted share prices and yields are subject to change.