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high yield investment products

The most commonly referred group of high yield investment products are the so called "junk bonds".

The junk bonds offer higher yields as they are classified as noninvestment-grade.

Although lower rated, these bonds are attractive to income investors who seek high yield income and higher total return.

This category of high-yield securities is generally considered speculative from investing perspective.

The speculative nature arises from the fact that the grading companies (such as Standard & Poors) have given these companies a stamp of greater risk of loss than higher-quality debt securities.

The junk status is usually dependent on the rating given by a credit rating agency.

The highest quality bonds are "AAA" and the credit scale goes as far down as to "C", and finally to the "D" which stands for the default category.

Investment grade bonds are generally given a "BBB" or higher rating. Bonds with a rating of "BB" and lower are called "speculative grade" and seen as having a greater inherent risk and possibility for default (the rating symbols may vary by rating agency).

Some investors diversify risk by placing a share of their overall portfolio into these bonds.

High Yield Investment Products - Resources

There are some good information sources related to bonds and junk bonds especially.

These resources include:

  • investinginbonds.com (try a search on High Yield Bonds, for example, to find articles)
  • bondsonline.com
  • bonds.yahoo.com

You can also quickly locate applicable bonds with the help of different types of bond screeners.

With these screeners (at sites such as bonds.yahoo.com), just place the definition criteria to such that the corresponding bonds are below investment grade.

For example, the last time I checked, a screener tool on the bonds.yahoo.com brought 612 bonds with a screener that returned bonds with a rating of min "D" and max "BB".

Risk Disclosure and Terms of Use

From high yield investment products page to Investments Guide index