This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New Global High-Yield Bond Fund Offers Promise

NEW YORK ( TheStreet) -- In the last few weeks markets have reacted swiftly to the threat of the Federal Reserve beginning to "taper" its bond purchases and other accommodative policies. An end to the current Fed policy would result in higher yields and lower prices for bonds and bond funds.

To avoid further large declines in their bond fund portfolios, investors will need to seek out more alternatives that have less interest-rate sensitivity. This is where the new PowerShares Global Short Term High Yield Bond Portfolio (PGHY) can help.

The fund can own sovereign debt, quasi-government debt and corporate debt. It is a high-yield fund so the credit quality is low. The ratings breakdown allocates 48% to BB-rated debt, 24% B and 21% in C rated bonds.

PGHY is a global fund, which means it includes domestic debt. The U.S. is the largest country at 47%, followed by Luxembourg at 7% and smaller weightings to more emerging markets including the Ukraine, Lebanon and Venezuela. The holdings are denominated is U.S. dollars so there is no direct currency risk but a currency crash in Lebanon, for example, would adversely impact the price of any dollar denominated debt from that country.

It is too soon for there to be any definitive yield information for the fund but PowerShares reports that yield to worst (yield to worst means the least favorable situations where any debt is called in early) is 4.75%, which would be a very high yield considering that the effective duration is 1.75 years.

PGHY has 31 holdings in all and investors will be familiar with some of the names. The fund owns individual issues from Sirius XM (SIRI), Chesapeake Energy (CHK) and Ally Financial (ALFI). Some of the more exotic holdings include Petroleos de Venezuela and Finansbank Turkey. With only 31 holdings, some of which have 4%-5% weightings, a default from even one bond would be a large drag on the fund's performance.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PGHY $22.28 0.00%
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs