Junk Bonds (High Yield)
Bonds rated below investment grade, offering higher yields to compensate for higher default risk.
In depth
High-yield bonds (HY) typically yield 3-7% above Treasuries. Spreads widen in recessions (default fears) and tighten in expansions. Default rates historically average ~3-4% but spike to 10%+ in severe downturns. Provides higher income and equity-like returns over cycles.