Guide · US High Yield Bond
Best high-yield bond ETFs
A high-yield bond ETF owns below-investment-grade corporate debt — bonds rated BB+ and lower, issued by companies whose balance sheets don't clear the investment-grade bar. The trailing yields on these funds run roughly 5.5–7%, well above the roughly 4% on an aggregate bond fund, and that gap is not free: it is compensation for default risk, and default risk concentrates in exactly the environments where stocks are also falling. High yield sits between the bond allocation and the stock allocation in both risk and behavior, which is why it gets handled differently from either.
How the scoring ranks these funds
Cost drives most of the spread on this leaderboard — expense ratios run from 3 basis points (SCYB) to 70 (SRLN), a far wider range than in core bond categories. The tax-efficiency sub-score, by contrast, sits in the mid-40s for every fund here: a large distribution taxed entirely as ordinary income is a category-wide property, so the ordering says little about relative tax treatment and a lot about fee and liquidity.
See the methodology for the full formula behind each sub-score.
Top picks
-
87
composite / 100
State Street's SPDR Portfolio high-yield fund and the top composite in the category — 5 basis points, roughly a tenth the fee of HYG, tracking the ICE BofA US High Yield Index across ~1,900 issues. USHY (8 bps, iShares) and SCYB (3 bps, Schwab — the cheapest in the category) hold the same broad market at similar fees; the low-cost broad funds occupy the top of the board together.
- Expense
- 0.050%
- AUM
- $11.33B
- Issuer
- State Street
- Detail
- SPHY page →
-
74
composite / 100
iShares' 0–5 year high-yield fund at 30 basis points. Limiting maturities to five years trims interest-rate risk; credit risk — the dominant risk in this category — remains in full. SJNK is State Street's near-equivalent at 40 bps.
- Expense
- 0.30%
- AUM
- $7.60B
- Issuer
- iShares
- Detail
- SHYG page →
-
71
composite / 100
State Street's broad high-yield fund, tracking the Bloomberg High Yield Very Liquid Index since 2007. One of the two long-running large funds in the category alongside HYG, at a slightly lower 40 bp fee and with very even issue-level diversification (top-10 holdings ~10% of assets).
- Expense
- 0.40%
- AUM
- $7.35B
- Issuer
- State Street
- Detail
- JNK page →
-
68
composite / 100
The most heavily traded fund in the category — roughly 37 million shares a day on a 30-day average, several times any other fund here — though at ~$18B it has ceded the size lead to USHY. The 49 bp fee reflects its role as an institutional trading and hedging vehicle; the cheaper broad funds above hold a near-identical underlying market at a lower fee.
- Expense
- 0.49%
- AUM
- $17.63B
- Issuer
- iShares
- Detail
- HYG page →
-
66
composite / 100
iShares' fallen-angels fund at 25 basis points — bonds issued as investment grade and later downgraded into high yield. A materially different index from the broad funds: ~160 holdings versus 1,100+, with top-10 concentration around 30%, which the concentration sub-score reflects.
- Expense
- 0.25%
- AUM
- $1.63B
- Issuer
- iShares
- Detail
- FALN page →
Also in the category
Other funds in the same category, ranked by composite score.
Credit risk behaves like equity risk in a drawdown
The defining property of high yield is that its losses cluster with stock-market losses. When credit spreads widen — 2008, the 2015–16 energy bust, March 2020 — high-yield funds fall alongside equities, while Treasury funds typically rise. A high-yield fund therefore provides much less of the diversification a bond sleeve usually exists to supply; it delivers a credit risk premium, which is a relative of the equity risk premium, not a hedge against it. The compare pages against an aggregate or Treasury fund show how different the underlying holdings are.
The tax profile
High-yield distributions are bond interest, taxed at ordinary-income rates with no qualified-dividend treatment, and at roughly 6% of fund value per year the absolute amounts are large. This is what holds the tax-efficiency sub-score in the mid-40s for every fund in the category — it is a property of the asset class, not of any one fund's management. The standard placement rule is the same as for other bond funds, only more so: tax-advantaged accounts when space allows. Inside a Traditional IRA all withdrawals are taxed as ordinary income regardless of source, and Roth distributions are untaxed, so the yield's ordinary-income character carries no additional cost there.
Why no lazy portfolio on this site holds a high-yield fund
None of the seven lazy portfolios on PlainIndex include a high-yield allocation, and that is representative of the genre. The classic construction takes its risk on the equity side and keeps the bond sleeve in Treasuries or broad investment grade, on the argument that a mix of stocks plus high-quality bonds spans the same risk-and-return territory as high yield with cleaner behavior in a crisis and a better tax profile. High-yield funds exist in the catalog because they are large, widely held, and worth scoring — not because they appear in the standard passive blueprints.
Senior loans are a different asset
BKLN and SRLN sit in this category but hold floating-rate leveraged loans rather than fixed-coupon bonds — BKLN tracks the Morningstar LSTA US Leveraged Loan 100 Index across 188 holdings, while SRLN is actively managed. Floating rates mean near-zero duration, so the funds carry almost no interest-rate risk while keeping all of the credit risk, and the underlying loans settle more slowly than bonds, which has historically stressed loan funds during redemption waves. At 65 and 70 bps they are also the most expensive funds here, which is most of why they sit at the bottom of the category.
Common questions
- Are high-yield bonds closer to stocks or to bonds?
- Structurally they are bonds — fixed coupons, a maturity date, a place above equity in the capital structure. Behaviorally they sit in between: in calm markets they trade on rates like bonds, and in stressed markets they trade on default expectations like stocks. Asset-allocation literature commonly models a high-yield position as part stock, part bond rather than as a full member of either sleeve.
- Is the quoted yield the expected return?
- No. Quoted and trailing yields overstate realized returns because some issuers default and recoveries are partial. Historically, realized high-yield returns have landed meaningfully below the stated yield and between investment-grade bonds and equities — which is consistent with the risk position the asset occupies.
Guide. Picks come from the live PlainIndex composite for this category; editorial commentary on each pick is hand-written. Re-pulled with every catalog refresh.
PlainIndex publishes data and editorial commentary — nothing here is personalized investment advice. Read the methodology for how the scores referenced here are computed.