Rieger Report: High Yield ETF Model Portfolio (UPDATE)

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USD High Yield ETF Model Portfolio 1st Quarter 2019 (Update)

Observe the inversion:

  • Yield relationship between JNK and SJNK have reversed. Short corporate junk bonds have moved cheaper than longer duration junk bonds (Canary in the coal mine? Did very risky junk evident itself on the short end? Prices for junk bonds move too high?)
  • In any case, this signals to me that the initial 40% model allocation in JNK needs to be reconsidered
  • Note: The initial weights (established in December 2018) for the model portfolio are maintained in the following data table for consistency and comparability to the original report: Rieger Report Initial High Yield ETF Model Portfolio
  • Selecting to move allocation either shorter into SJNK or municipal high yield seems warranted given the yield compression seen in JNK
  • Short term high yield municipal bonds continue to be rich relative to other options

USD High Yield ETF Model Portfolio Allocations for 1st Quarter 2019 (Updated)

RiegerReport_022019_1

Data as February 19, 2019.

Sources: State Street Global Advisors and VanEck. TEY = Taxable Equivalent Yield and assumes a 37% Federal tax rate. 1. Yield averages calculated using Taxable Equivalent Yields and are used for illustrative purposes only.

For Reference: Year-to-date Index Yield Change (Bps)

RiegerReport_022019_2

Data as February 19, 2019.

Source: S&P Dow Jones Indices, LLC.

Analyst Disclosure:

  • JR Rieger or the Rieger Report LLC has not received compensation either directly or indirectly from the sponsor(s) of the ETF(s) included in this report.
  • At the time of this writing, JR Rieger does not own the ETF(s) cited in this report.
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