High Yield Bonds

High yield bonds have a low crediting rating as these are highly risky options offered by start-up firms or capital intensive companies.  It provides higher payout as compared to traditional options and is reliable as a start-up firm need to take care of its business properly to improve its credit rating to sustain. 

In the latest, investors poured more than $3 billion in the month of June 2019 in such junk bonds, in the midst of risks of market volatility. Moody provides a rating below Baa to such bonds, and S&P gives the rating BBB where, at these levels, the offers are considered investment grade, and below it, the C rating ones, are at a higher risk of default.  

Investors buy it through mutual funds or ETFs, and the yield is spread, which fluctuates over time depending on changes in the economic conditions. One of the largest outflows from the option was reported in 2017 December when $2.5 billion was withdrawn from it, mainly, due to tax cuts and job issues.