Generally speaking, it has not paid to take risks in 2022.
As interest rates rise, the prices of risky assets like stocks and cryptocurrencies fell, but so did the prices of bonds. Especially high-yield bonds.
Yet even in the junk bond space, some ETFs performed significantly better than their peers, and even the broad equity indexes, during the first three quarters of 2022.
Here are the top 10 high-yield bond ETFs year-to-date by price performance through market open on Oct. 4.
10. Invesco Global Short Term Hi Yld Bd ETF PGHY High Yield Bond -7.64%
Want success in high-yield fixed income? Stay away from long durations, and that's just what Invesco's PGHY ETF has done. The fund has an SEC 30-day yield of 9.16%, a duration of 1.17 years and a 0.35% total expense ratio.
9. Invesco BulletShares 2025 HY Corp Bd ETF BSJP High Yield Bond -7.37%
Invesco's second ETF on this list, BSJP, is also a short-duration junk bond fund. BSJP, part of the BulletShares lineup of ETFs, carries a 0.42% total expense ratio.
8. iShares iBonds 2025 Term HY and Inc ETF IBHE High Yield Bond -6.77%
BlackRock's version of a 2025 vintage junk bond ETF, IBHE, performed similarly to its BulletShares cousin. It's expense ratio comes in at an even lower 0.35%.
7. Invesco BulletShares 2023 HY Corp Bd ETF BSJN High Yield Bond -6.51
The shorter the better, and Invesco's BulletShares 2023 High Yield Corporate Bond ETEF fits the bill perfectly. BSJN, as with much of the BulletShares lineup, carries a 0.42% expense ratio.
6. iShares iBonds 2024 Term HY and Inc ETF IBHD High Yield Bond -5.91
Another calendar-year targeted corporate bond ETF, iShares' $86 million IBHD carries a 0.35% expense ratio.
5. Toews Agility Dynamic Tactical Inc ETF THY High Yield Bond -5.56
The $36 million THY is an expensive ETF, carrying a 1.16% expense ratio. THY is set up to take a defensive position during bearish markets and to hedge its positions using derivatives and ETFs.
4. iShares Interest Rate Hdg Hi Yld Bd ETF HYGH High NoYield Bond -5.01
Who would have thought that a period of rising rates would be good for an interest rate hedge ETF? HYGH is one of the more expensive ETFs on the list,, with a 1.12% expense ratio. The fund uses derivatives and swaps to hedge interest rate volatility.
3. Invesco BulletShares 2022 HY Corp Bd ETF BSJM High Yield Bond -3.51
We've made it to the top three ETFs, and we'll see that shorter is better. The BulletShares 2022 ETF, BSJM, stands as evidence that cutting durations served fixed-income investors well so far in 2022.
2. iShares iBonds 2023 Term HY and Inc ETF IBHC High Yield Bond -2.19
BlackRock’s version of a 2023 vintage ETF outperformed its BulletShares cousin, and with a lower expense ratio, which was good enough to come in second on our list.
1. iShares iBonds 2022 Term HY and Inc ETF IBHB High Yield Bond 0.87
The best U.S. high-yield fixed income ETF has only $101 million or so in assets, but iShares IBHD also delivered the only positive performance through the first three quarters of 2022.