Personal Finance
New Funds Target Riskier Debt
New exchange-traded funds invest in risky company loans as interest rates stay unclear.
The world of investing sees a new trend. Funds called ETFs now buy into collateralized loan obligations. These CLOs are bundles of loans given to companies with weaker credit.
Investors are looking for higher returns. Regular bonds offer less when interest rates are uncertain. CLOs pay more because they carry more risk. These new ETFs make it easier for everyday investors to own a piece of these riskier loans.
The demand for these funds grows. It shows investors want different ways to make money. They are willing to take on more risk for the chance of better payouts. This strategy becomes popular as the market changes.
Source: CNBC
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