These new high yield bond funds are hitting the market as interest rates start to fall

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AB Short Duration High Yield ETF News

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New high yield funds are coming online even as the Federal Reserve is expected to cut rates and the economy is showing signs of slowing.

A spate of new funds focused on high yield debt have hit the ETF market in recent months at a time when riskier corporate bonds are at a crossroads. The latest fund to join the race is the BlackRock High Yield ETF , which debuted Tuesday. The managers for the fund also helm the BlackRock High Yield mutual fund, which has a four-star rating from Morningstar and a yield of roughly 6.5%. "This is a substantially similar ETF.

Michael Schlembach, managing director and senior portfolio manager for Marathon Asset Management, compared high yield borrowers to U.S. consumers who had long-term debt, like mortgages, that were locked in at low rates from before the Fed's rate hike cycle and are just now starting to borrow again.

 

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