Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you believe that there's good money to be made in junk bonds, the SPDR Barclays Capital High Yield Bond ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The junk bond ETF's expense ratio -- its annual fee -- is a relatively low 0.40%.
This ETF has performed reasonably well, ranked top in its category over the past three years by Morningstar. But it's also rather young, with just a few years on the books. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
What's in it?
Lots of promising companies offer tempting bonds. A peek inside this ETF reveals some examples, many of which have seen their shares perform well lately. There's power generator Calpine
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Ford
Wireless broadband provider Clearwire
Sprint itself has had a tough year, with its stock down 56%. Recently reporting rising revenue and large, growing losses, the company faces challenges as it drops some old networks, rolls out its new 4G LTE one, and spends billions subsidizing iPhone accounts. The Sprint bond the ETF owns has a 9% coupon rate and a 2018 maturity.
The big picture
Junk bonds are risky, but they offer big yields, A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier. This ETF, for example, sports a 12-month yield of 7.3%.
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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Ford and Verizon Communications, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of and creating a synthetic long position in Ford . The Motley Fool has a disclosure policy.