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Junk Bonds: Caveat Emptor

Junk bonds have been a wild ride for investors since the 1970s and 1980s. After the 2008 financial crisis, a record low interest rate environment created even more demand for junk bonds to shore up income. However, the recent combination of rising inflation and record low interest rates creates a dangerous environment for junk bond investors.

Let’s examine why investors may want to beware of junk bonds, as well as some alternatives to consider for yield.

To learn more about different ways to generate income, visit our Fixed Income Channel.

Inflation on the Rise

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Junk Bond Spreads vs. Treasuries

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Other Sources for Yield

The Bottom Line