Rieger Report: High Yield ETF Model Portfolio Rebalance Q2 2019

USD High Yield ETF Model Portfolio Rebalance Q2 2019

Taking some corporate junk bond risk off the table:

  • Reducing exposure to corporate junk bonds (JNK) from 40% to 10% taking advantage of the positive run in 2019 year-to-date and taking some of the selloff/bear market/recession risk off the table.
  • Maintaining 30% allocation in short term corporate junk bonds (SJNK) as yields v. duration risk makes this asset class attractive relative to longer term corporate junk bonds.
  • While remaining relatively rich v. other asset classes, allocating 20% towards short term municipal high yield (SHYD) to change overall risk profile of portfolio and take advantage of potential stability as high munis are in very short supply.
  • Increasing allocation to 40% from 30% in the municipal high yield market (HYD) as the limited supply of high yield municipal bonds is highly sought after. Taxable Equivalent Yields of high yield munis are attractive relative to yields of corporate junk bonds.


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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. Data as March 18, 2019.

Analyst Disclosure:

  • This model portfolio is intended to be an illustration of how fixed income ETFs can be used tactically. As always, consult with your financial advisor before investing in any financial product.
  • 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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Rebalance for Q1 2019
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