Of the nearly two dozen products in the High Yield Bonds ETFdb Category, it is two broad-based funds that account for the bulk of assets; HYG and JNK are by far the most popular choices in this asset class. But they are hardly the only ETF options for exposure to junk bonds; there are options for achieving very granular exposure in terms of regional exposure with products such as EMHY (emerging markets) and HYXU (global ex-U.S.). Similarly, those looking to fine tune duration have the suite of BulletShares products from Guggenheim (BSJC through BSJH) as well as funds such as SJNK. Now, thanks to both recent and more dated innovations, there are options for focusing in on a specific stretch of the credit risk spectrum as well. When it comes to junk bond ETFs, there are now several shades of credit risk, from the relatively high quality to the downright speculative. In other words, there are now ETFs for tapping into various corners of the junk bond market, from borderline-default to borderline-investment grade.

Below, we profile a handful of junk bond ETFs that might be appealing to those looking to micro-manage their risk and return profiles :

PowerShares Fundamental High Yield Corporate Bond Portfolio (PHB)

PHB is one of the more interesting innovations in the ETF industry over the last ten years; this fund is linked to an index that uses fundamental factors such as cash flow to determine individual weightings. As a result, the PHB portfolio tends to be tilted towards the higher quality issuers of junk bondsas opposed to those with the largest outstanding debt balances. The result is a lower yield than products such as JNK and HYG, but lower credit risk as well .

SPDR BofA Merrill Lynch Crossover Corporate Bond ETF(XOVR)

This new addition to the ETF lineup straddles both sides of the traditional credit quality divide; the underlying portfolio includes both debt rated investment grade and junk bonds in approximately equal allocations. The junk bonds all maintain ratings at the higher end of the spectrum, giving XOVR an average credit rating far above products such as JNK and HYG (and a much lower expected return).

iShares B-Ca Rated Corporate Bond Fund(QLTC)

This bond ETF specifically targets the lower end of the credit spectrum, holding a portfolio of highly speculative corporate debt that offers potential for very attractive returns. As the name suggests, QLTC holds corporate bonds that are rated B or below, resulting in a basket of very risky bonds that may be on the verge of default. In return for taking on this risk, of course, investors have the chance to earn a very nice yieldone that is considerably higher than broad junk bond ETFs just as HYG .

Market Vectors Fallen Angel ETF(ANGL)

This ETF is comprised of fallen angel corporate debt, a term that refers to bonds that were once rated investment grade but have since crossed over to junk territory. Given this focus, it shouldn't be surprising that ANGL generally holds higher quality junk bonds, including some that have been recently downgraded.

The table below demonstrates the divide in terms of junk bond ETFs, using the BB rating as a cut-off point. While some junk bond ETFs have almost no assets rated below BB, others consist almost entirely of these lower quality securities. Which ETF is right for you, of course, depends on your objectives and risk tolerance. As is often the case when discussing the rapidly expanding ETF universe, there is a wide range of options from which to choose.

Ticker ETF BB & Higher B & Lower 30-Day Yield
JNK SPDR Barclays High Yield Bond ETF 37% 63% 7.0%
HYG iShares High Yield Corporate Bond Fund 46% 54% 6.7%
PHB Fundamental High Yield Bond Portfolio 69% 31% 5.1%
XOVR Crossover Corporate Bond ETF 100% 0% 2.8%
QLTC B-CA Rated Corporate Bond Fund 16% 84% 7.4%
ANGL Fallen Angel High Yield Bond ETF 66% 34% 6.4%

Disclosure: Long JNK.

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