POWERSHARES HYCB (AMEX:PHB)

This ETF is a good way to earn a steady dividends. Slow a steady.

As the economy continues to rebound, interest rates will continue to rise. Normally this is pretty simple - interest rates increase and the value of bonds and bond funds decrease. However, for ETFs like PHB spread compression has allowed the value to remain stable while yields on safer securities increased. However, I believe spread compression has about run its course. The price of this and other high yield ETFs will have to fall to reflect the higher risk relative to higher quality fixed income securities. Inflation and dollar weakness should also continue to support stock prices so the relative performance of PBH to SPY should be especially poor. One caveat - the market is overdue for a correction and a correction will likely come with a flight to quality - causing Treasury yields to fall temporarily. I am willing to wait that one out on this pick -- longer run this will be a loser.

Interest rates will not begin to rise until Q2 2011.

Investment Thesis
- though stocks are way down majority of US corporations have lots of cash, expect them to buy back their debt at these discounts
- high yield in meantime due to bonds selling at discounts
- expect bonds to recover before stocks

Going to pick 5 bond funds to play this macro idea. Not a bond expect, not doing a ton of research to differentiate between different corp bond funds.

This High Yield bond ETF seems to give enough yield to offset the default risks in the combined package. Perhaps thats why there is a 4% premium in its cost to the underlying value of the individual junk bonds in it.