Assets in the (THYF ) have grown to $845.6 million, according to ETF Database, as the fund leans into a high yield bond market that its managers describe as structurally stronger than it was before the 2008 financial crisis.
THYF’s assets reached $845.6 million as investors sought actively managed high yield income.
Credit quality has climbed, with BB-rated bonds now 62% of the benchmark index.
Fundamentals have held up through the pandemic, the 2022 energy crisis and recent tariff disruptions.
Credit spreads, the extra yield investors demand over safer government bonds, sit near their tightest levels in years. Even so, the ICE BofA Global High Yield Index yielded 7.31% as of March 31, according to research from T. Rowe Price portfolio manager Michael Connelly and portfolio specialist Anton Dombrovskiy.
That figure reflects yield to worst, the lowest return investors could expect if bonds are paid off early. Yields at that threshold have historically preceded a median 12-month return of 7.6%.
T. Rowe Price applies this research through THYF, an actively managed high yield ETF. The fund pulled in $30.92 million over the past month, according to ETF Database, pushing its dividend yield to 6.96%. That’s above both its ETF Database category average of 6.35% and its FactSet segment average of 6.31%.
See more: What Rising Structural Inflation Means for Your Bond Portfolio
Quality among high yield issuers has also improved. Bonds rated BB, the highest tier below investment grade, made up 62% of the ICE BofA Global High Yield Index as of March 31, 2026. That’s up from 39% in 2007, according to the T. Rowe Price research.
CCC-rated bonds, among the weakest tier before default, fell from roughly 15% of the index in 2007 to 7% as of March 2026, Connelly and Dombrovskiy wrote. Default rates across the asset class also remain below their 20-year average of 3.5% for U.S. high yield bonds.
Global high yield markets have grown to roughly six times their size in 2000, according to Connelly and Dombrovskiy. That expansion has widened the pool of countries, sectors and issuers available to investors, offering exposure to different economic and credit cycles.
Trading conditions have also improved. Bid/ask spreads, the gap between what buyers offer and sellers accept, have narrowed as electronic and portfolio trading have expanded, according to the report. That shift has reduced the extra return investors once demanded for holding less liquid bonds.
Company balance sheets underpinning high yield bonds have also strengthened, according to Connelly and Dombrovskiy. Cash ratios, a measure of a company’s ability to cover short-term bills, remain elevated, while leverage ratios, which show how much of a company’s funding comes from debt, stay at healthy levels. High yield issuers have weathered the Covid-19 pandemic, the 2022 energy crisis and recent tariff disruptions along the way.
High yield bonds also compare favorably with stocks on an income basis. The J.P. Morgan Domestic High Yield Index offered a 7.13% yield to worst as of late May, more than three percentage points above the earnings yield on the S&P 500 Index, according to Connelly and Dombrovskiy. The gap reflects higher income potential alongside historically lower volatility for high yield bonds relative to stocks.
THYF’s average bond traded at 95.59 cents on the dollar as of March 31, according to the fund’s factsheet. Issuers sometimes refinance or repay these bonds early, before their official maturity date. Connelly and Dombrovskiy said this can push actual returns above a bond’s quoted yield.
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