3 Best High-Yield Bond ETFs in Canada (June 2026)
The best high-yield bond ETFs in Canada include XHY.TO (~0.55% MER), ZHY.TO (~0.50%), and NHYB.TO (~0.30%). These ETFs invest in lower-rated corporate bonds, offering higher income than traditional bond ETFs, but with increased credit risk and volatility, especially during economic downturns or market stress.
High-yield bond ETFs are designed for Canadian investors seeking higher income by investing in lower-credit-quality bonds, often referred to as “junk bonds.” ETFs like XHY.TO, ZHY.TO, and NHYB.TO focus on high-yield corporate debt, offering significantly higher yields than investment-grade bond ETFs.
The trade-off is increased credit risk. These ETFs are more sensitive to economic conditions, as lower-rated companies are more likely to default during downturns. However, in stable or improving economic environments, high-yield bonds can deliver strong income and total returns.
In this guide, we break down the best high-yield bond ETFs in Canada, comparing yield, credit risk, fees, and diversification so you can choose the right ETF for your TFSA, RRSP, or income-focused portfolio.
At a Glance: Quick Comparison
Side-by-side snapshot of fees, yield, and returns. Data updates daily.
| ETF | MER | AUM | Yield | YTD | 1Y |
|---|---|---|---|---|---|
Top XHY.TO iShares U.S. High Yield Bond Index ETF (CAD-Hedged) | — | $1.1B | 6.12% | -1.56% | +4.35% |
ZHY.TO BMO High Yield US Corporate Bond Hedged to CAD Index ETF | — | $1.5B | 6.34% | -2.06% | +4.64% |
NHYB.TO NBI High Yield Bond ETF | — | $1.5B | 5.47% | -1.37% | +4.24% |
What Is an ETF?
A high-yield bond ETF in Canada is an exchange-traded fund that invests in lower-rated corporate bonds, typically below investment grade (BB or lower). These ETFs generate higher income through elevated interest payments, compensating investors for taking on additional credit risk.
For example, XHY.TO (~0.55% MER) and ZHY.TO (~0.50%) provide exposure to diversified portfolios of global high-yield corporate bonds. NHYB.TO (~0.30% MER) offers a more cost-efficient option with exposure to U.S. high-yield bonds, while HYG (U.S.-listed) is a widely used benchmark ETF in this space.
High-yield bond ETFs are commonly used in TFSAs, RRSPs, and income portfolios. However, investors should understand that these ETFs behave more like equities during market stress due to their credit risk exposure.
The 3 Best ETFs: Ranked & Reviewed
Detailed breakdown of each pick with live data.
iShares U.S. High Yield Bond Index ETF (CAD-Hedged)
$16.40
-1.56% YTD
NA
Returns
YTD
-1.56%
1Y
+4.35%
3Y
+6.92%
5Y
+2.74%
BMO High Yield US Corporate Bond Hedged to CAD Index ETF
$10.94
-2.06% YTD
Returns
YTD
-2.06%
1Y
+4.64%
3Y
+6.96%
5Y
+2.48%
NBI High Yield Bond ETF
$21.55
-1.37% YTD
NA
Returns
YTD
-1.37%
1Y
+4.24%
3Y
+7.62%
5Y
+3.23%
Pros & Cons
Pros
- Higher income potential compared to investment-grade bond ETFs
- Attractive yields driven by lower-rated corporate bonds
- Can enhance portfolio income in low-rate environments
- Diversification across multiple corporate issuers and sectors
Cons
- Higher credit risk, including potential defaults during economic downturns
- More volatile than government or investment-grade bond ETFs
- Performance can decline sharply during recessions or market stress
- Sensitive to both interest rates and credit market conditions
Compare These ETFs Head-to-Head
Drill into a side-by-side breakdown of performance, AUM, and yield.
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Frequently Asked Questions
What is the best high-yield bond ETF in Canada?
XHY.TO is one of the most popular high-yield bond ETFs in Canada due to its diversified exposure to global junk bonds and strong income potential. Alternatives like ZHY.TO and NHYB.TO offer similar exposure with slightly different fees and structures.
Are high-yield bond ETFs risky?
Yes, high-yield bond ETFs carry higher credit risk because they invest in lower-rated companies. During economic downturns, default risk increases, making these ETFs more volatile than investment-grade bond ETFs.
Are high-yield bond ETFs good for a TFSA or RRSP?
High-yield bond ETFs can be held in both TFSAs and RRSPs. In a TFSA, income is tax-free, while in an RRSP, taxes are deferred. Many investors use them in RRSPs due to the tax treatment of interest income and their higher yield profile.