Where There's Yield, There's Risk

If the economy is heading into a black hole, why are investors bidding up the prices of some high-yield corporate bond exchange-traded funds?

Prices paid for some ETFs are exceeding the value of the underlying securities, known as the net asset value. Such premiums were once the preserve of closed end funds. These days, anything is possible. Case in point: the massive premium being paid for the iShares iBoxx $ High Yield Corporate Bond Fund(HYG Quote), an ETF.

HYG's NAV is about $66, but this hasn't stopped some investors from driving the price to $75. The yield is in the 11% to 12% range. But where there's yield, there's risk, especially during a recession. ...