Rieger Report®: High Yield ETF Model Portfolio Q3 2019 Rebalance

USD High Yield ETF Model Portfolio Rebalance Q3 2019 

As we enter into the third quarter of 2019:

  • Maintaining second quarter allocations.
  • Changing corporate high yield exposure from SPDR ETFs SJNK and JNK to iShares by BlackRock ETFs SHYG and HYG due to data reporting being more reflective on iShares.com as well as lower management fees for iShares SYHG v. SPDR SJNK.
  • Maintaining a 60%/40% ratio of municipal high yield to corporate junk bond exposure.
    • Net higher taxable equivalent yields help make this part of the muni market attractive for higher tax bracket investors.
    • When combined with a severe supply / demand imbalance these factors keep municipal high yield relevant in my opinion.
    • Longer duration of munis extends duration risk which I feel is appropriate in this rate environment.

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Sources: iShares by BlackRock and VanEck. TEY = Taxable Equivalent Yield and assumes a 37% Federal tax rate. Data as of 6/17/2019 unless otherwise noted. 1Data as 6/14/2019. 2Yield averages calculated using Taxable Equivalent Yields and are used for illustrative purposes only.

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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