an tSionna: {05.15.13}

From Bespoke Investment Group:  {Highlights mine.}

"The chart {above} shows the average yield to maturity on the Merrill Lynch High Yield (Junk) Master Index.  At a current level of 5.24%, investors have never been paid less to own high yield debt.  Yields are so low, in fact, that five years ago the yield on the 10-Year US Treasury was higher than the current yield on junk bonds.  In the chart below, the red dots on the blue line represent periods going back to 2000 where the yield on the 10-year US Treasury was higher than the current yield on the High Yield Master Index.  With yields this low, high yield bonds are anything but high yielding."

My comment:  High yield also at some point has to likely equate to much higher risk at these levels.  I still own some of these in ETFs {and have purchased small amounts for some new money} but I am realistic as to their prospects down the road.  These are one of the first things I will likely sell for clients when interest rates start to rise.  The reason to own them right now is the yield is superior to most everything else and because there is no indication that interest rates will rise substantially in the near future.  However, this is an investment nobody should want to overstay their welcome at some point.

*Long certain junk bond ETFs in certain client accounts and risk strategies as well as in certain personal accounts.

Link:  Bespokeinvest.com: High Yield Yields Less Than Treasuries Five Years Ago