CCC Bonds ETF 14% Yield too good to be true?
Hi everyone,
I would like to take advantage of the high-interest environment and start adding some risky bonds to my PA. I have been looking at the ETF XCCC which yield are 12-14% annually, and it seems too good to be true.
How can a bond ETF yield that much and not go down in price in the long run? I can stomach volatility and understand that CCC bonds have high default rate but confused by this instrument.
Thanks!
Default rates for CCCs are high in a recession. I wouldnt expect the YTM to be your return. An 1% holding in an unsecured bond that tanks 50-80 points (look at diebold last week), that's a big hit. Adjusting for default losses, single Bs are a better choice, at least historically
thanks a lot, do you know where I can find historical returns for different ratings?
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