Don't Call These Bonds "Junk"

WERE high-yield corporate bonds a sports franchise, I could honestly deem them a dynasty.

- JEFFREY R. KOSNETT

I downloaded the Callan Periodic Table of Fixed Income Index Returns, that multicolor matrix of annual results by subcategory. Callan tracks debt classes from one-year Treasury bills to emerging-markets securities. Starting in 2003, the high-yield-bond sector placed first or second 10 times— including in 2023, with the category up more than 9% through November 30. Nothing else has nearly as many gold and silver medals.

High-yield bonds also regularly outgain diversified bond indexes by staggering margins. The SPDR Bloomberg High Yield ETF (symbol JNK) has a 15-year annualized return of 8.0%, compared with 2.6% for Vanguard Total Bond Market Index Fund (BND). That covers a period that before 2022 was the best run for bonds in my 45-year career. And the SPDR ETF tracks an in- dex. Actively managed entries such as Fidelity Capital & Income (FAGIX), Hotchkis & Wiley High Yield (HWHAX), PGIM High Yield (PBHAX) and