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Be Wary of High Yield Bonds And Comparisons to the Lehman Index
The Lehman Brothers U.S. Corporate High Yield Index has been yielding about 10%. But, according to Morningstar, averages can be deceiving. The BB-rated slice of the Lehman index (representing about 41% of the total index) yields only about 7.6%. The B-rated slice (representing about 42% of the index) yields 9.9%.
It is the CCC-rated slice of the Lehman index that yields 14%.
So, Morningstar advises not to be "surprised, or disappointed" to see that your bond fund is not matching the average Lehman index yield of 10%.
Source: Morningstar Advisor.com
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