Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Junk Bonds Have Performed Well, But Are They Still Attractive?

|Includes: HYG, SPDR Bloomberg Barclays High Yield Bond ETF (JNK), PHB

In good times, they are a sophisticated but risky investment labeled "high yield", in bad times they are simply called "junk". High Yield Bonds, otherwise known as junk bonds are currently trading at an average yield of roughly 9.75%. This is down from over 22% late last year. Due to this year's market rally and investor confidence coming back into the marketplace, high yield bonds have benefited greatly. In fact, most high yield indices on average are up over 50% year to date, performing far better than most other asset classes such as equities (up roughly 25% year to date), international equities (up roughly 40% year to date), and even the secretive yet risky hedge fund asset class (up roughly 20% year to date). Because of this vicious rally in high yield bonds, we feel that an attractive risk/reward scenario is no longer available in this asset class, and any investor with exposure should consider taking the risk off the table. With yields back near there long term averages, upside in high yield bonds seems to be a sucker's bet. Going forward, we will be closely monitoring the high yield bond market and will be ready to take the short side of the trade when the opportunity presents itself. Until then, stay nimble.

Disclosure: None